HC Deb 05 June 1984 vol 61 cc125-6W
Sir David Price

asked the Chancellor of the Exchequer what representations he has received since his Budget statement about value added tax on vehicles for the disabled; and if he will make a statement.

Mr. Hayhoe

Following the Budget, from 1 May relief from VAT and car tax has been given in respect of cars especially designed or adapted for the carriage of a disabled person on a stretcher or in a wheelchair and up to five other persons. My right hon. Friend the Chancellor and I have received representations from a number of bodies concerned with transport for the disabled and from individuals seeking further reliefs. It would not be feasible to make a general concession in respect of all vehicles for all disabled people on grounds of cost and risk of abuse; but there are two areas in which further relief is considered appropriate. These are:

  1. 1. The zero rating of leasing charges paid by recipients of mobility allowance and mobility supplement for cars released to them under the Motability scheme;
  2. 2. Widening of the existing VAT relief for specially adapted vehicles used by charities to carry handicapped persons in wheelchairs to include vehicles with more than 12 seats.

ZERO RATING OF LEASING CHARGES UNDER THE MOTABILITY SCHEME

Motability has represented that the effect of the Budget proposals, in particular the phasing out of first year allowances, will lead to a substantial increase in the initial rentals they would have to charge to the disabled. This would be partly offset by other Budget measures, but it will now be more than offset by the zero rating of the leasing charges. This relief will apply to the leasing of unused motor vehicles for a period of not less than three years by a taxable person whose business is mainly concerned with providing motor cars to disabled persons in receipt of a mobility allowance or war pensioner's mobility supplement. To mirror the gradual build-up of the impact of the Budget measures, the relief will apply to leasing agreements entered into on or after 1 September 1984. It will enable initial leasing charges to be kept significantly lower than they would otherwise have been. In some cases, the charges may be eliminated entirely, leaving a surplus available for the benefit of disabled lessees.

WIDENED VAT RELIEF FOR WELFARE VEHICLES USED BY CHARITIES ETC

Relief is at present available under group 16 of the VAT zero-rate schedule for certain specified goods when bought with charitable funds or voluntary donations for supply to specified eligible bodies, including charitable institutions providing care or medical or surgical treatment for handicapped persons. The relief covers ambulances, including certain specially designed and adapted vehicles used by the bodies concerned to carry handicapped persons in wheelchairs, subject to restriction that there should be no more than 12 fixed seats. With effect from 1 July, VAT relief will be extended to any motor vehicle with not more than 50 seats designed or substantially and permanently adapted for the safe carriage of a handicapped person in a wheelchair, subject to certain conditions. These will be as follows:

  1. (a) the provision of a fitted electrically or hydraulically operated lift, or in the case of vehicles with fewer than 17 seats, a fitted ramp to provide access for a passenger in a wheelchair; and
  2. (b) in the case of vehicles with over 16 seats, a requirement that there should be a 1: 10 ratio of wheelchair spaces to fixed seats, so that vehicles with more than 16 but fewer than 27 seats would have to have at least two such spaces, and so on.

In addition to the VAT relief, relief from car tax will also be extended. Car tax applies broadly to vehicles with fewer than 12 seats. There has been relief for ambulances since 1973, and from 1 May this year relief has been available for vehicles designed or substantially adapted for the carriage of a person in a wheelchair or stretcher and up to five other persons. But no relief was available for similarly adapted vehicles with between seven and 11 seats used by charities and other bodies. The relief will now be extended from 1 July to those vehicles which are eligible for VAT relief.

The VAT changes will be made by Treasury orders shortly to be laid before Parliament. Because the car tax legislation does not allow conditional reliefs, the car tax relief will initially be extra-statutory.