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HMRC internal manual

VAT Transport

HM Revenue & Customs
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Zero-rating of passenger transport: Transport of vehicles on ships, aircraft or trains - passengers or freight?

If vehicles are transported or ferried on ships, aircraft or trains, the supply by the operator will be either one of passenger or freight transport.

The carriage of a bus, coach or taxi with passengers is regarded as passenger transport, whether or not charged at the private car rate by the operator, and is zero-rated provided the supply would otherwise qualify for zero-rating under Group 8.

The transportation of unaccompanied vehicles, including buses and coaches, and trailers, at whatever rate charged, is treated as a supply of freight transport, and is not normally zero-rated (but see below).

The treatment of a supply in respect of all other vehicles is based on the rate charged as illustrated below.

Passenger transport

The transport of:

  • vehicles with drivers or passengers charged under the private car rate, including motorcycles, cars, caravans and trailers;
  • small commercial vehicles charged under the private car rate whether carrying passengers or freight.

Supplies of these services are treated as passenger transport and are zero-rated under Group 8, item 4(a).

Freight transport

The transport of:

  • vehicles charged at a rate appropriate to driver accompanied vans, lorries, buses and coaches (without passengers);
  • drivers accompanying such vehicles;
  • all unaccompanied vehicles and trailers whatever the rate charged.