Consultation on VAT Treatment of Private Hire Vehicles

• PHV services provided by VAT-registered businesses are subject to the standard rate of VAT (20%)
• Businesses in the PHV and taxi sector can choose whether or not to register for and charge VAT if their annual turnover is below the UK VAT threshold
• Larger PHVOs are typically VAT-registered while the majority of PHV drivers are not
• The liability to charge VAT on PHV services lies with the person or business making the supply
• PHVOs can account for VAT as either “agent” or “principal” depending on their business model
• The consultation focuses on the VAT treatment of PHV services and does not include “account work”
• Taxi and PHV policy is devolved in Wales, Scotland, and NI, while the UK Government is responsible for regulation in England
• England is covered by three pieces of legislation for taxi and PHV regulation, with the 1976 Act being the subject of a High Court judgment in 2023.

Source: gov.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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