VAT and Transport

Posted 06/08/2019

VAT on transport can raise a question for some people, especially when preparing for a VAT return. It is important to remember to always ask for a VAT receipt from your driver/ticket issuer showing the VAT number of the organization.

This article refers to the transport of a vehicle, ship or aircraft provided with a driver or crew for passenger transportation. If there is no driver or crew present, then it is a hire of transportation device.For transport to be charged at zero-rate, the transport arrangement itself must meet one of the three criteria.
1) The transport start should be from somewhere in the UK, and the destination should be outside the UK. This is because part of the travel is outside the scope of UK VAT.
2) The carrying capacity of the vehicle, ship or aircraft should be more than 10 passengers. Public transport such as holiday flights or train travel are zero-rated items because they can carry over 10 passengers.
3) The flight itself is a scheduled flight. The flight should either be on a timetable, or the flight occurrence is frequent such as departing on a weekly basis.

The standard rate of VAT will apply if any of the following are applicable:
1) If the supplier includes admission for the destination as well as transport, for example a trip to a theme park which includes the entry fee on top of coach travel.
2) If the transport is between a car park and an airport terminal.
3) If the aircraft event if for an experience day, such as flights to combat fear of flying or an aircraft fly-around and landing at the departure area, or not advertising a landing destination and other aircraft rides such as a hot air balloon ride.
4) If the passenger capacity of the vehicle is less than 10. If a vehicle was purchased with 10 seats, but 4 were removed to make space for storage and wheelchair access then the capacity would be less than 10 and VAT would apply at the standard rate.

An incidental cost for the transport is usually incurred in the cost of the ticket, such as accompanying luggage, pet or vehicle facilities, sleeping areas or seat reservations. The VAT on these items is the same as that charged on the main portion of transport. So if the travel itself on a train was zero-rated, then the sleeping cabin portion would also be a zero-rated VAT expense.

Ancillary costs are optional purchases a passenger can make on the journey, and are usually charged with the standard rate of VAT. If meals and catering food are purchased on the journey, these items would be subject to standard rate VAT, such as trolleys on trains and aircraft and food facilities on ships. Use of cycle storage, additional transport for unaccompanied luggage, or storage for left luggage or lost property can also be liable to the standard rate. If the same company own the car park there it is likely the parking will be standard rated.

Tags: VAT, Transport, Bus, Taxi, Flights, Train, Travel