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.

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

Latest articles

Notifying cessation of self-employment

Any taxpayers that have ceased to be self-employed must notify HMRC of their change in status. There are a number of steps that must be followed if a taxpayer ceases trading as a sole trader or if they are ending or leaving a business

Submitting CIS nil monthly returns

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry. Businesses in the construction industry are known as ‘contractors’ and ‘subcontractors’ and should be

Check employment status for tax

The Check Employment Status for Tax (CEST) tool can be used to help ascertain if a worker should be classified as employed or self-employed for tax purposes in both the private and public sector.

The service provides HMRC’s view if IR35 legislation

Class 1A payment deadline

Class 1A NICs are paid by employers in respect of most benefits in kind provided to employees such as a company car. There is no employee contribution payable. If you provided taxable benefits to staff or directors your business is likely to have a