Taxis: VAT
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of VAT on taxis and private hire cars in rural areas.
Answered by Dan Tomlinson
Private hire vehicle (PHV) services provided by VAT-registered businesses are, and always have been, subject to the standard rate of VAT (20%).
The Government’s announcement at Autumn Budget 2025 puts an end to the exploitation of a VAT administration scheme, designed for the tour operator sector, by a small number of large private hire vehicle operators seeking to pay a lower rate of VAT than others.
This won’t affect smaller operators outside London whose drivers contract directly with passengers, or black cabs, neither of which have attempted to exploit this scheme.
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