£15,000 TAX BURDEN: Black cab VAT campaign challenges Treasury over taxi wheelchair accessibility tax treatment

Taxi Now Group has formally challenged HM Treasury over the VAT treatment of licensed London taxi vehicles, arguing that the Government’s current policy is inconsistent with its approach to other wheelchair accessible vehicles.

The campaign began earlier this year after the group wrote to HM Treasury calling for VAT to be removed from new licensed London taxis. The Treasury responded through Exchequer Secretary to the Treasury Daniel Tomlinson MP, stating that licensed taxis fall outside the scope of zero-rated passenger transport under UK VAT legislation because they carry smaller groups of passengers on a discretionary basis.

Taxi Now Group has now submitted a formal rebuttal, contending that the Treasury’s reasoning fails to recognise the statutory duties placed on licensed London taxi drivers under equality legislation.

At the centre of the campaign is the legal requirement that every licensed London taxi must be fully wheelchair accessible and that licensed taxi drivers are required by law to carry wheelchair users, subject to limited exemptions provided for in legislation. The group argues that this legal obligation means wheelchair transport provided by licensed taxis cannot reasonably be described as discretionary.

The organisation also points to the Government’s decision in the November 2025 Budget to retain VAT zero-rating for wheelchair accessible vehicles purchased through the Motability scheme. It argues that if VAT relief is justified because wheelchair transport is regarded as essential, the same principle should apply to London’s purpose-built licensed taxis, which are specifically designed and licensed to provide accessible public transport.

According to Taxi Now Group, the current VAT treatment adds more than £15,000 to the purchase price of a new LEVC TX taxi. The group says this represents a significant financial hurdle for prospective taxi drivers, who must also fund years of Knowledge of London training, licensing fees, insurance and other business costs before entering the trade.

The campaign also links the tax issue to wider concerns over the long-term sustainability of London’s black cab industry. Taxi Now Group says the licensed fleet has fallen below 14,000 vehicles, while the number of new London taxi driver licences issued declined from 179 in 2020 to 107 in 2025. It argues that reducing the upfront cost of purchasing a compliant taxi could help lower barriers to entering the profession.

“The Treasury told us that taxis carry passengers on a discretionary basis,” A spokesperson from Taxi Now Group said. “We disagree. The law says otherwise. A licensed London taxi driver is legally required to carry wheelchair passengers. The vehicle that carries them should be treated the same as any other wheelchair accessible vehicle under VAT law. The argument is not complicated. We will keep making it until we get a straight answer.”

Taxi Now Group said it approached established taxi trade organisations before launching the campaign in an effort to pursue the issue collectively, but those discussions did not lead to a joint initiative. The organisation has therefore proceeded independently and says it will now seek to build political support through engagement with MPs, transport policy stakeholders and the wider public while awaiting a further response from HM Treasury.