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Cabbies say Freenow’s increased commission piles fresh pressure on drivers already battling soaring costs and tax limits
Freenow by Lyft’s move to increase commission to 20% could prompt more cabbies to prioritise street and rank work as operating costs continue to rise.
According to drivers, the decision to increase its London black cab commission to 20% from 14 September 2026 will add to the financial pressure facing drivers already absorbing higher vehicle, fuel, licensing and maintenance costs.
The platform says the additional commission will support investment in product development, driver benefits and passenger marketing. However, for drivers, the change means surrendering £20 from every £100 generated through applicable Freenow bookings.
The effect will depend on the commission rates currently paid by each driver and the volume of work received through the platform. Cabbies participating in Freenow’s on-cab advertising programme, or joining it before the end of 2026, will remain on their existing commission rate and see little to no change.
For drivers outside that programme, there may be limited scope to compensate for the higher deduction by working additional hours. Taxi drivers have already faced increases in fuel prices, vehicle financing, insurance, repairs, licensing and other business expenses, while passenger demand has become less predictable recently amid wider economic and geopolitical uncertainty.
The £90,000 VAT registration threshold presents a further commercial constraint for higher-earning self-employed drivers. Once taxable turnover exceeds the threshold, a driver must normally register for VAT and account for the tax on eligible revenue.
Unlike many businesses, taxi drivers operating regulated metered fares cannot simply add VAT to the passenger’s fare. This means VAT can effectively be absorbed from the amount already charged, potentially creating a sharp reduction in retained income once registration becomes necessary.
Platform commission does not ordinarily reduce the gross fare amount counted as turnover for VAT purposes, even though it reduces the money retained by the driver. A £100 fare is still likely to count as £100 of turnover while the platform separately deducts its commission. Drivers should get individual tax advice based on their business structure and booking arrangements.
This creates a difficult position for cabbies approaching the threshold. Generating more platform work to recover a higher commission deduction could move them closer to or past the compulsory VAT registration, meaning a bigger tax liability.
Freenow’s planned 20% charge may therefore influence where drivers choose to look for passengers. Unlike fuel, vehicle and licensing expenses, platform commission is a cost that cabbies can potentially avoid by declining app bookings and concentrating on street hails, taxi ranks, direct customers or lower-cost booking channels.
Street and rank fares still count towards taxable turnover, but removing a platform deduction allows a driver to retain a larger proportion of each fare before other operating costs and tax liabilities. For drivers already close to their practical working-hour limit or the VAT threshold, that difference could make non-platform work commercially more attractive.
The risk for Freenow is that drivers become more selective about accepting jobs, particularly shorter journeys, bookings involving significant pickup time or work available during periods when street demand is strong. The platform will need to demonstrate that its bookings provide enough additional demand, journey value and reduced waiting time to justify the increased cost.
Freenow is introducing 24-hour urgent driver support and instant cashout for Gold, Silver and Bronze drivers. It has also launched a round-the-clock telephone booking service for black cab passengers and plans to route demand from North American Lyft users to London Freenow drivers.
Those measures could increase booking volumes, including airport, hotel and longer-distance journeys. However, the commercial value to drivers will depend on whether the additional work produces greater net earnings after commission, operating costs, unpaid pickup time and potential VAT liabilities are taken into account.
For cabbies who cannot extend their working week or increase turnover without encountering further tax pressure, the decision may come down to the value of each working hour. At a 20% commission rate, some cabbies may conclude that their time is more profitably spent pursuing work that does not carry a platform deduction.
