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HMRC internal manual

VAT Transport

Zero-rating of passenger transport: Passenger transport provided by a universal service provider - item 4(b)

Royal Mail provides passenger transport services in certain remote rural areas as part of its service to the community as the universal service provider in the UK.  These services are zero-rated under item 4(b) irrespective of the type of vehicle or its carrying capacity.

The relief applies to any universal service provider in the UK, though at the time of publication of this guidance, Royal Mail is the sole designated universal service provider within the meaning of Part 3 of the Postal Services Act 2011.