UK to unveil private jet tax in 2011 budget

The Chancellor George Osborne will announce in the Budget a tax on private jet flights as part of a crackdown on tax loopholes, the BBC understands.

Airline passengers will also see passenger duty frozen this year, it is understood.

Mr Osborne wants to raise an extra £1bn a year by tackling tax avoidance – targeting the wealthy and businesses, it is believed.

It will be billed as the biggest tax avoidance crackdown for several years.

The chancellor is keen to chase as much revenue as he can get to bring down the budget deficit.

Tax loopholes

Travellers using corporate jets do not currently have to pay any duty.

Mr Osborne will consult on whether to extend air passenger duty to private jets or introduce a new tax on them.

He is also set to announce that air passenger duty will not be raised at all in the forthcoming tax year.

It has been assumed until now that it would rise in line with inflation.

The duty for short haul economy flights was raised by £1 to £12 last November and by more for longer routes.

The chancellor will target other corporate tax loopholes, with the aim of raising a total extra yield of £1bn a year.

This will include sophisticated avoidance schemes used by companies to pay senior executives.

He will argue that this is part of a drive to make the rich pay their fair share of tax.

Tax evasion

HIM Revenue & Customs is stepping up its attempts to bring in more unpaid tax. Part of the campaign will focus on criminal gangs that evade VAT and duties.

The aim is to increase the number of prosecutions.

Two hundred HMRC staff are being trained in self-defence techniques to deal with potentially violent fraudsters when premises are raided.

This is being funded by £900m earmarked from departmental cost savings.

According to HMRC, 90% of taxpayers pay what they owe in full. The campaign will crack down on the 10% who evade tax bills.

These include some small businesses and self-employed professionals. The chancellor has set HMRC a target of raising an extra £7bn by the 2014/15 tax year.

Tax experts said news of a Budget clampdown on avoidance was unsurprising given the Treasury’s need to boost revenue.

The 50% top tax rate was likely to stimulate more elaborate avoidance schemes, experts said.

One pointed out that all governments believed in a holy grail of lost tax but finding it was never easy.
Source: BBC