Tax
< 1 min read

Taxis: What is Liable to VAT?

Rod Love

Taxis: What is Liable to VAT?

HMRC sets out specific guidance regarding the application of VAT if you are in the taxi and private hire car trade. VAT Notice 700/25 – How VAT applies to taxis and private hire cars – applies.

Private hire cars include mini-cabs. The notice is relevant if you are:

  • a driver who owns or rents a vehicle (an owner driver)
  • the owner of a business which operates a number of vehicles
  • operating a taxi association

The fares a driver charges to their passengers for taxi or private hire journeys are liable to VAT at the standard rate. This also includes any additional charges for things like baggage and waiting time.

Other sources of income liable to VAT may include:

  • referral fees received from another taxi firm
  • charges for supplying fuel or the rental of vehicles and radios to drivers
  • administration charges to customers

Tips or gratuities voluntarily given by passengers are not regarded as payment for a supply and are outside the scope of VAT.

There are also differing rules surrounding driving instructors as well. Find out more in our latest article here on Driving Instructors and VAT – Who Pays?

If you are looking at purchasing a new car for your private hire taxi business then read up on whether or not you will be able to claim back any VAT for the purchase in our article Recovering VAT on Car Purchases

Source: HM Revenue & Customs Mon, 19 Jul 2021 00:00:00 +0100

Share:

Share on linkedin
Share on twitter
Share on facebook

Related articles

Subscribe to our newsletter and stay up-to-date.

Contact us today to see how we can help you.