‘COMPLEX ISSUE’: Government response still pending on VAT threat to private hire fares
- Perry Richardson
- Sep 11
- 2 min read
The Government has confirmed that it is still considering the possibility of applying 20% VAT to all private hire vehicle (PHV) journeys following a public consultation that ended more than a year ago.
The issue stems from a consultation launched in response to the Supreme Court ruling in Delta Merseyside Ltd v Uber Britannia Ltd, which clarified the VAT obligations of operators in the PHV sector. Since then, questions have mounted over whether the Treasury plans to standardise VAT treatment across all PHV trips.
Richard Holden, Shadow Secretary of State for Transport, submitted a series of parliamentary questions to the Chancellor seeking clarity. These included whether the Treasury plans to impose VAT on all PHV fares, what assessment has been made of the impact on vulnerable passengers, and whether an impact assessment was conducted before the Delta ruling was handed down.
He also pressed the Government on when it intends to publish its official response to the consultation, which closed on 8 August 2024.
Responding, Exchequer Secretary Dan Tomlinson said the Government is still examining the full range of views submitted. He stated: “The Government continues to take this complex issue very seriously and recognises businesses’ need for certainty. The Government is carefully considering the wide range of views shared through last year’s consultation on the VAT Treatment of Private Hire Vehicles and will publish a detailed response soon.”
A 20% VAT charge would have big implications for operators, drivers and passengers alike. Operators could be forced to either absorb the cost, take more commission from drivers or pass it on to customers. Industry groups have already raised concerns that the added cost could particularly affect disabled passengers and other vulnerable groups who rely heavily on private hire services.
The Government’s next move will likely define how the PHV sector operates for years to come. Any decision to impose VAT uniformly would not only reshape pricing models but could also impact local licensing systems, fare setting, and viably affordable transport for those currently using the services.
The Treasury has not yet given a date for the publication of its consultation response.
