Not having to pay the additional ~100GBP APD has made the difference in choosing a Latitude+eUp award versus a PY+eUp award before. Be a shame if they figure out how to charge it.

I've also wondered before if AC was getting out of paying the additional APD by claiming that eUpgrades have no cash value and don't entitle anyone to anything, so the passenger doesn't in fact have the "expectation or entitlement" to the upgrade and therefore the additional APD is not required. The fact that they account for or charge the additional cost in some scenarios would seemingly show that they are not getting out of paying it.

From gov.uk:

Upgrades

If a passenger pays to upgrade at any stage in the journey, then they’re travelling in the higher class.

The same applies to free upgrades if there’s an element of entitlement or priority not enjoyed by other standard class passengers. For example ‘perks’ enjoyed by airline employees.

A passenger remains in standard class if they get a free upgrade but has no expectation of, or entitlement to one.