Taxis and private hire businesses

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

Autumn Budget 2025

Taxis and private hire businesses

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

Autumn Budget 2025

This guidance note provides an overview of the VAT treatment of supplies made by taxi and private hire or mini cab businesses.

Autumn Budget 2025

Legislation is to be introduced with effect from 2 January 2026 to prevent private hire vehicle and taxi operators from using the Tour Operators’ Margin Scheme when journeys are not supplied with, and ancillary to, certain other travel services.

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

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