The scrapping of VAT payments on electric Wheelchair Accessible Vehicle (WAV) taxis could help boost the number cabs and accelerate the industry’s move to a greener fleet.
At present, Value Added Tax (VAT) is 20% of the car’s value. With EVs costing more than internal combustion vehicles, buyers are currently paying more in tax to make the move to cleaner vehicles.
Taxi drivers have long debated whether or not they should be paying VAT at all, especially those offering WAV facilities to the public.
As a rule, VAT generally has to be paid on all goods and services. However, in certain circumstances there’s relief from paying VAT on a limited range of goods and services for disabled people.
There is VAT relief for those purchasing a vehicle adapted to carry wheelchairs. According to HMRC, individuals purchasing a vehicle on behalf of a disabled wheelchair user can claim relief if the supply of a ‘qualifying motor vehicle’ has been:
designed to enable the disabled wheelchair user to travel in it, or
substantially and permanently adapted to enable the disabled wheelchair user to travel in it and the adaptation is necessary to enable that person to travel in the vehicle.
If WAV tax relief was offered to cabbies it could potentially knock off over £9,000 on the new LEVC TX taxi.
Historically under EU rules, the question around VAT exemption for taxis was quickly put to bed following a question put forward by the then Department for Transport (DfT) Minister, Andrew Jones MP, in October 2016.
Carly Nimmo, of VAT & International Excise at HM Treasury, replied on the MP’s behalf saying: “There is unfortunately no provision within the EU VAT rules to introduce a zero rate or exemption on the purchase of taxis and therefore the government cannot remove the VAT on such purchases.
“While the UK remains a member of the EU, we will continue to meet our obligations, including on the agreed rules on the application of VAT.”
However, with the UK leaving the EU the debate can now begin again, especially if the Government wishes to see more environmentally friendly wheelchair accessible electric taxis on the streets in the UK.