Taxis: VAT
The question
To ask the Chancellor of the Exchequer, if she will extend the VAT exemption afforded to adapted motor vehicles for people with disabilities to London’s Black Cabs.
Answered by James Murray
The Government is committed to ensuring support is there for the most vulnerable people in our society. Certain products designed solely for use by a disabled person can qualify for a zero rate of VAT.
VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s third largest tax, forecast to raise £171 billion in 2024/25. Exceptions to the standard rate have always been limited and balanced against affordability considerations.
Another key consideration when assessing a new VAT relief is whether the cost saving is likely to be passed on to consumers in the form of lower prices. Evidence suggests that businesses only partially pass on any savings from lower VAT rates and so in some cases, reliefs do not represent good value for money.
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