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VAT treatment

The zero rate of VAT that applies to passenger transport in vehicles on journeys that take place wholly within the UK refers to supplies in vehicles that are designed to carry not less than ten passengers and supplies by a universal service provider. Taxi and private hire businesses do not qualify as a universal service provider and in most, if not all cases, the vehicles used are designed to carry less than ten passengers. The general effect is that a taxi or private hire business that is, or should be, registered for VAT, is required to account for VAT at the standard rate on its supplies of passenger transport. For information about the zero rate of VAT that applies to certain supplies of passenger transport, see the Liability - passenger transport guidance note.

Taxi and private hire businesses may also receive additional income from the following sources (this list is not