Delivering Scotland's Air Departure Tax

Introduction

Scottish Approach to Taxation

The Scottish Government's approach to tax policy has developed over time, particularly following the devolution of further tax powers in 2016. In December 2021, the Scottish Government published Scotland’s first Framework for Tax, which sets out the principles and strategic objectives that underpin the Scottish Approach to Taxation, as well as our approach to decision making, engagement and how we manage and sequence tax policy and delivery. This approach was further emphasised and developed in the Tax Strategy, which was published in December 2024. The Tax Strategy set out the Scottish Government’s commitment to involving stakeholders wherever possible in the design of our tax system, and this consultation forms a part of that approach.

Our approach continues to be underpinned by the four canons of taxation proposed by the renowned Scottish economist Adam Smith. These are certainty, proportionality to the ability to pay, convenience and efficiency. We have added two further principles to reflect our commitment to engaging and collaborating with stakeholders, and to reflect our approach to tackling tax avoidance.

The Framework ensures that our decisions on tax policy are coherent and rooted in a defined set of principles and objectives, rigorously appraised and developed through an established policy cycle, which puts proactive engagement at the heart of tax policy making.

We will take full account of the principles and objectives set out in the Framework in carrying out this consultation and future ADT policy development.

Air Departure Tax

The Scotland Act 2016 provides the Scottish Parliament with the power to introduce a devolved tax on the carriage of passengers on flights from airports in Scotland, to replace the UK Air Passenger Duty (APD). This followed the 2014 Smith Commission, which recommended that the power to implement such a tax be devolved.

APD has been in place since 1994 and is paid by air carriers. It is chargeable on a per passenger basis and applies to flights departing from UK airports. APD follows a band structure with the rates payable by air carriers varying by destination and class of travel. In 2001, the UK Government introduced an exemption to APD covering outbound flights from all Highland and Islands airports to anywhere in the world (including connecting flights).

The Scottish Parliament passed the Air Departure Tax (Scotland) Act in 2017 to establish ADT as the devolved tax in place of APD with a planned introduction date of 1 April 2018.

However, the Scottish Government identified concerns around the existing APD Highlands and Islands exemption’s compliance with European Commission State Aid rules. In 2017, Scottish Ministers took the position that the Highlands and Islands exemption would need to be notified to and approved by the European Commission. This was because the Scottish Parliament was legislating for the first time on this matter and required certainty that continuing to tax exempt the carriage of passengers on Highlands and Islands flights under a new exemption would be compliant with EU State Aid rules.

The Scottish Government deferred the introduction of ADT beyond its originally planned implementation date of 1 April 2018 on the basis that maintaining the exemption was necessary to protect connectivity for communities in the Highlands and Islands, and to ensure that devolved powers were not compromised. The Scottish Government has consistently reaffirmed its commitment to the introduction of ADT once a solution for the Highlands and Islands exemption was identified.

In line with this commitment, the 2026-27 Scottish Budget set out that the Scottish Government had developed proposals for a revised Highlands and Islands exemption and that ADT would come into effect on 1 April 2027.

ADT rates and bands will match those of the UK Government’s APD for the first year of operation in 2027-28 to provide certainty and stability for industry and taxpayers. Rates and bands for 2028-29 will be set out at the 2027-28 Scottish Budget.

Purpose of the consultation

This consultation seeks views on the Scottish Government’s proposals for a Highlands and Islands exemption from ADT. Responses to this consultation will support the development of the secondary legislation which will give effect to an ADT Highlands and Islands exemption and inform the associated impact assessments.

While decisions on future ADT policy (e.g. from 2028-29 onwards) will be taken at future Scottish Budgets in the next Scottish Parliament, this consultation also invites evidence and views on the broader role of ADT. This is intended to ensure that ADT policy is well-designed, takes full account of the Scottish context and maximises the opportunities offered by devolution.

We would like to hear from as wide a variety of individuals and organisations as possible, particularly those involved with aviation, the Highlands and Islands, rural affairs, tax, environmental and legal sectors. We will hold roundtable events with aviation industry representatives, regional stakeholders and business organisations during the consultation period.

Next steps

The consultation will remain open for eight weeks, closing on 26 March 2026, in line with the dissolution of the Scottish Parliament in advance of the Scottish Parliament election on 7 May 2026.

The Scottish Government will publish its response to this consultation and introduce the secondary legislation required to commence ADT during the next session of the Scottish Parliament.

Consultation Structure

This consultation document comprises four parts.

Part A – Highlands and Islands exemption

Part B – Taxation of private jets

Part C – Operational and future policy considerations

Part D – Impact Assessments

Part E – Reference and Response