Exchequer Secretary explains why wheelchair accessible taxis are excluded from VAT exemption
A recent exchange in Parliament has raised ongoing questions about the Government’s policy on VAT exemptions for wheelchair accessible vehicles (WAVs) used as taxis.
Louie French MP, Shadow Parliamentary Under Secretary for Culture, Media and Sport, posed a question to the Chancellor of the Exchequer. He sought clarification on why accessible taxi vehicles are excluded from the VAT relief applied to disability-adapted motor vehicles.
Responding on behalf of the Treasury, Exchequer Secretary James Murray explained that WAVs qualify for a zero rate of VAT when purchased by disabled individuals for personal use or by charities providing these vehicles for disabled people. However, he clarified that taxis, as commercial entities, do not meet the criteria for this relief.
Taxis are a form of public transport and are compelled to purchase WAV taxis in many cities like London. There is no commercial choice offered to cabbies to purchase a non-wheelchair accessible taxi and they therefore must invest in vehicles costing around £70,000, rising to around £100,000 if finance is added.
Murray stated that while taxis often provide essential transport services to disabled passengers, they are not charities and serve a broader customer base, not limited to wheelchair users. As such, the Government does not extend VAT relief to taxis, even if they are wheelchair accessible.
He did, however, note that VAT-registered taxi drivers can reclaim the VAT paid on their vehicles, offering a measure of financial reprieve within the existing system. Very few taxi drivers are VAT registered given that they cannot pass the VAT costs onto the customer unlike most other services.
This decision highlights the Government’s position on VAT relief and the limitations applied to commercial entities, even those that serve vulnerable groups. The debate raises broader questions about the balance between supporting accessibility and maintaining a consistent tax policy.
Murray said: “Wheelchair accessible vehicles (WAVs) are subject to a zero rate of VAT when purchased by a disabled person for their personal use, or by a charity that will make the vehicle available to disabled people.
“Although taxis provide transportation services to disabled customers, they are not charities and not all their customers are wheelchair users. Therefore, this VAT relief does to extend to taxis that are WAVs.
“However, if a taxi driver is VAT registered, they are eligible to reclaim the VAT paid on their vehicle.”
