WHERE’S THE VAT? Why your taxi receipt doesn’t often show VAT
- Perry Richardson
- 4 hours ago
- 2 min read
Passengers submitting expense claims may ask why a taxi receipt does not show VAT.
Despite the most recent media around ‘Taxi Tax’, in most cases, the answer is straightforward. The majority of UK taxi drivers are self-employed sole traders who operate below the VAT registration threshold and are therefore not registered for VAT.
Under current UK rules, businesses only have to register for VAT if their taxable turnover exceeds £90,000 in a rolling 12-month period. Large numbers of licensed taxi and private hire drivers fall below this threshold. As a result, they are not permitted to charge VAT to customers and cannot display VAT on receipts, even if a passenger requests it.
For those journeys, the fare is VAT-exempt in practice, not because transport is exempt, but because the driver is not VAT-registered. This means the passenger has no VAT to reclaim. From an expenses perspective, the full fare remains a legitimate business cost, but there is no VAT element that can be offset or charged back.
Passengers querying missing VAT on taxi receipts are often encountering a long-standing feature of the UK taxi market rather than an error.
This frequently causes confusion for passengers who are used to reclaiming VAT on hotels, fuel or rail travel. Unlike those sectors, the taxi trade is highly fragmented, with most drivers operating as independent contractors rather than employees of a larger VAT-registered firm.
The position can change when bookings are made through licensed operators, app-based platforms or fleet companies. Most private hire operators are VAT-registered in their own right and structure fares so that VAT applies to part or all of the booking fee. In those cases, the receipt may show VAT, but it is typically the operator charging VAT, not the individual driver.
This distinction has become more visible as corporate accounts and mobility platforms expand. Passengers may see VAT listed on receipts from one journey but not another, even within the same city, depending on how the booking was taken and who is deemed to be supplying the service.
Drivers who are not VAT-registered cannot add VAT to fares, even if pressured to do so by customers or corporate travel departments. Companies are advised to treat the fare as a gross cost rather than a reclaimable VAT expense unless the receipt clearly shows VAT charged by a registered operator.
