VAT “Value Added Tax” is mandatory for goods and services in many countries. In order to calculate the VAT rate, all these products and services are classified into different categories. The four most common VAT categories are; zero-rated, super-reduced, reduced, and standard-rated.
Transport services like trains, buses, taxes, flights, and fuel also bear VAT. Thus, when accessing any of these services, you will also have to pay the specified VAT amount along with the transport’s original cost.
However, not all transport services have the same VAT percentage. In fact, they are divided into different sectors, implying that their VATs vary from one another. If you want to learn about VAT on train tickets, taxi fares, and flights, then check out the following context.
One of the most frequently asked questions include, "Is there VAT on train tickets UK?” VAT on travel expenses in the UK is quite complex. But if you are familiar with the VAT categories, these VAT terms will be less challenging.
The train tickets VAT belong to the zero-rated category, implying that a 0% tax is imposed on them. Most public transport services in the UK belong to the zero-rated category. The government subsidised public transport to make them more accessible for the citizens.
Remember, the train tickets are not VAT-free. Instead, 0% VAT is charged to them. You can verify the train travel VAT rate in the invoice for the ticket, where it will be mentioned that 0% VAT is imposed on the total amount.
Since Brexit, the rules for VAT train travel outside the UK have been changed. Now, if you travel outside the UK by train to other European countries, you must pay VAT according to the specific region's legalities.
In Ireland, all rail tickets are exempted from VAT. You can present your ticket and booking confirmation mail as proof of purchase.
Also Read; Is There VAT on Parking Fees and Fines? Off Street Parking
UK-based businesses registered with HMRC can reclaim the VAT on products and services they avail for professional activities. For instance, if you purchased office chairs for business and paid the standard VAT rate, i.e., 20% over the total amount, you can reclaim the VAT back. However, you can only do so if you are registered with HMRC and comply with the VAT regulations.
Similarly, suppose you utilize public transport for business activities, such as you give transport allowance to your employees for professional purchases. In that case, you can reclaim the VAT from HMRC incurred over the transport fare.
Many people complain that they utilized trains for business activities and followed the HMRC’s procedure systematically but could not reclaim the VAT. This is because train tickets are zero-rated, implying that VAT was never imposed on the train’s fare. Thus, you cannot reclaim it from HMRC when you didn’t initially pay VAT on train tickets.
Before Brexit, UK businesses could reclaim VAT on train tickets outside the UK (places where VAT applies to train fares). But now, when the UK is no longer part of the Union, the HMRC registration would not be able to give you VAT reclaim on train tickets outside the UK.
Though taxis are also a public transport service, they come under the standard-rated category for VAT. The standard rate for VAT on travel expenses in the UK is 21%. This means if you take a taxi ride in the UK, a 21% VAT will be charged.
Taxi drivers must be registered with HMRC to charge VAT fees on their ride fares. If they are self-employed and their income is below the VAT threshold, they won’t be able to charge VAT from the customers. Most Uber drivers come under the self-employed category of taxi drivers.
In Ireland, taxis charge VAT at the rate of 15%, inclusive of standard VAT at 23%. In the case of Uber taxis, the rate of VAT is 20% which is charged by Uber directly, unlike taxis where drivers charge the VAT if they meet the criteria of the VAT threshold.
Also Read; Is There VAT on Postage, Guide for Rules and Regulation
You can reclaim VAT on taxi fares if the driver is registered with HMRC. Self-employed drivers do not charge VAT; thus, you cannot reclaim VAT from HMRC for rides with such drivers.
To reclaim the VAT on taxi fares, you must have the invoice for the ride. You can even ask the driver whether he’s VAT-registered. This will help you determine whether you are eligible for VAT reclaim.
Conclusion
From the above context, it must have become apparent that train fare VAT is 0%, and so does the airfare. To simplify things, you can remember that public transport services in the UK are zero-rated.
On the contrary, private transport facilities like jets with less than ten seats or taxis are standard-rated. The standard-rated products and services in the UK are charged 21% VAT. However, The VAT rate varies from time to time. Thus, you can also refer to the HMRC's official website to check the updated VAT rates.
FAQs
Some transport services in the UK are standard-rated, implying that 21% VAT is charged on the total fare. However, most public transport services such as trains, flights, and buses are zero-rated, which means 0% VAT is charged on their fares.
If the train has at least ten seats, it becomes a "passenger transport." Such transport services are zero-rated in the UK, implying no tax is added to the fare.
If your transport means include buses, trains, airlines, or any other public means, there would be no VAT. However, if you are travelling on a private jet (with less than ten seats) or taxi, then the fare will include 21% (standard-rated) VAT.
Rían Doyle
I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.
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