THE SPRING BUDGET: What will taxi drivers be hoping for from the Chancellor come Budget Day?
As the 2024 Spring Budget approaches on 6 March, anticipation mounts within the UK taxi sector, with potential policy changes on the horizon that could significantly impact its future. With the pre-election atmosphere adding to the stakes, the industry awaits several critical updates.
One of those expected on Budget Day arrived early, as the trade welcomed the extension of the vital Plug-in Taxi Grant (PiTG), but outstanding issues include VAT regulations, fuel duty, electric chargepoint investment and tax thresholds.
VAT concerns take centre stage
The industry is abuzz with debates over VAT implications, especially following the Uber Britannia Ltd v Sefton MBC High Court ruling. With private hire operators nationwide pushing for zero-rated VAT status to alleviate financial pressures, the Government has pledged to explore the ruling's impacts further. Baroness Vere of Norbiton has confirmed an upcoming consultation, suggesting that the Budget might bring news on this front.
Additionally, the contentious issue of the VAT treatment of Wheelchair Accessible Vehicle (WAV) taxis is under scrutiny once more. Taxi drivers have long debated whether or not they should be paying VAT on cabs specifically designed to offer facilities for disabled passengers. 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, specifically there is VAT relief on the purchase of vehicles 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.
So the valid question remains shouldn’t wheelchair accessible, licensed taxis be included? Could this Budget finally see some movement on the topic, we shall see.
VAT on EV charging
Another key topic is the investment in electric vehicle charging infrastructure, critical for the widespread adoption of electric taxis. The current VAT applied to public charging points has been a deterrent for many drivers, pushing them to rely on private home charging solutions, which many cabbies do not have access to. A revision of VAT rates on charging point usage could significantly influence taxi drivers' transition to electric vehicles, aligning with environmental objectives throughout England.
In recent times, Budget days have also been an opportunity to announce new measures to support electric vehicle drivers.
This month, the Government launched its ‘Plan for Drivers’ which already includes grants for schools, cash for councils and new proposals to boost charging point numbers. Can we expect more? I’d like to think so, given the political timing.
Cut or freeze on Fuel Duty?
Fuel duty always comes under media scrutiny in the run up to the Budget, and this one will be no different. Just this week, RAC Fuel Watch data revealed the price of petrol rising up more than 3p a litre in the last three weeks while diesel has increased by 4p.
Worryingly for LEVC TX drivers, unleaded has risen by 3.2p from 140.2p on 29 January to 143.4p on 18 February and diesel shot up from 148p to 152p in the same period, adding around £2 to fill up your black cab.
Fuel duty currently sits at 52.95p per litre after the Chancellor announced a 12-month freeze in last year’s Spring Budget.
In 2023, Jeremy Hunt said the 5p per litre reduction in duty which took place in March 2022 would be retained for another year as inflation and also said duty would not increase in line with inflation. However, can the Government afford two-years’ worth of Fuel Duty freezes?
In any other year the motorist would probably get hit, but in election year, it would be a brave move while motoring cost continue to escalate.
VAT thresholds
The rising operating costs are pushing some hard-working taxi drivers to stop working due to VAT threshold concerns. Increases in running costs and the cost of living has forced many drivers to earn more to maintain the same standard of living. However, the increased turnover means some of the hardest working cabbies are now approaching the frozen £85,000 VAT threshold and potentially face an extra tax bill. With meter tariffs set to rise again soon, there could be more cabbies glancing nervously at the VAT threshold. Will we see some movement here from the Chancellor?
