URGENT CLARITY: 59 PHV firms send open letter to Chancellor calling for 20% ‘Taxi Tax’ to be RULED OUT ahead of Autumn Budget

Private hire vehicle (PHV) operators across the UK have issued a joint warning to the Chancellor ahead of this month’s Autumn Budget, calling for urgent clarity on VAT rules that could reshape the future of local transport.

In an open letter signed by 59 private hire and taxi businesses, operators have urged the Government to rule out applying a full 20% VAT rate on private hire journeys.

The signatories argue that such a move, also described as a “Taxi Tax” by the media, would increase fares for private hire services, reduce driver numbers and jeopardise the viability of small and medium-sized operators that provide a vital service in many parts of the country.

The letter is being spearheaded by Veezu, the UK’s largest private hire technology platform, which says more than half of the journeys taken on its network are for essential purposes like healthcare, commuting and education. These figures aim to challenge the perception that PHVs are largely used for discretionary travel.

Nathan Bowles, Chief Executive Officer of Veezu, said: “PHVs keep Britain moving, connecting communities that rely on us for essential journeys, and a 20% VAT hike would hit the elderly, disabled, and rural passengers hardest. The open letter is a united call from operators across the UK urging the Government to confirm that PHVs will not be subject to a 20% VAT rate. Businesses cannot plan, invest or grow while uncertainty remains, and every month without reassurance contributes to the slow erosion of one of Britain’s most essential transport services.

“A clear, consistent policy would protect passengers and licensed drivers from rising costs, back British businesses, and restore confidence in a sector millions depend on for everyday travel and essential journeys.”

The call comes in the wake of a long-awaited consultation on the VAT treatment of PHV services, which closed in August 2024. Despite the consultation concluding over a year ago, the Treasury has yet to publish its response. Operators say the lack of communication has created further instability, with many unable to commit to investment or long-term planning due to the financial risks associated with a possible 20% VAT obligation.

The open letter coincides with a pivotal legal ruling earlier this year. In July, the Supreme Court delivered its judgment in the Delta and Veezu v Uber case, confirming that PHV operators regulated under the 1976 Miscellaneous Provisions Act may lawfully operate under various business models, including as agents or principals. While the ruling was seen as offering long-overdue legal clarity to the sector, operators now warn that the potential VAT changes could reverse much of the stability gained from that outcome.

Some regional operators have highlighted the disproportionate impact any VAT rise would have on areas such as Wales, the South West and the East of England. These regions often lack the public transport infrastructure available in major urban centres, making residents more reliant on PHV services. Veezu has reported that only 12% of journeys across its network are made for leisure purposes, with the rest linked to work, health or education. Fare increases caused by VAT changes could leave rural residents with fewer affordable transport options and increase pressure on overstretched public services.

Operators are also concerned about the broader economic impact. A rise in PHV costs could limit access to work and education, harm the night-time economy, and increase isolation among vulnerable groups. The letter warns that applying VAT uniformly to PHV fares could undermine regional development goals and put additional strain on local authorities.

The Government is expected to provide an update on the issue in the Autumn Budget on 26 November. Until then, the industry remains in limbo. The signatories are calling for direct engagement with ministers to agree a fair and sustainable approach that avoids disproportionate harm to passengers, drivers and businesses.

The list of firms backing the letter includes both national and regional operators such as Bolt, Aberdeen Taxis, Radio Taxis Southampton, Star Cars and 247 Cars Willenhall. Collectively, these businesses represent a significant share of the UK’s 265,000 licensed PHV drivers.

Operators say that unless the Chancellor intervenes, the introduction of a 20% VAT rate could trigger a decline in service availability and affordability, particularly outside major cities, and undo years of progress in improving access to flexible, on-demand transport.