HMRC set to invest £36 million implementing new tax rules for taxi and ridehail apps

Her Majesty's Revenue and Customs (HMRC) will invest over £36million to enforce new digital tax rules affecting taxi and private hire apps and other digital platform workers.

The investment aims to ensure tax compliance for digital platform transactions, creating a fairer and more level playing field for businesses operating in the digital marketplace.

Starting from January 2025, taxi and private hire operators will be required to report their drivers' earnings to HMRC annually. To facilitate compliance with this requirement, the digital platforms will collect and report revenue data from their drivers to HMRC.

The "Reporting Rules for Digital Platforms" legislation, which will be enforced from January 2024, mandates that all digital taxi and private hire vehicle operators in the UK must collect and store revenue data for all registered drivers. This legislation is expected to impact an estimated 2-5 million businesses operating through digital platforms.

As part of this initiative, HMRC are set to allocate £36.69m and employ 24 full-time equivalent staff to oversee the new tax requirements. It should be noted, however, that the final costs to HMRC are still being developed.

The investment by HMRC aims to streamline the reporting process and promote tax transparency. To ensure compliance, digital platforms will request additional details from their drivers, including their National Insurance numbers, which will become part of their records.

The Government's decision to invest in enforcing these new digital tax rules reflects its commitment to adapt to the evolving digital economy and ensure that all businesses contribute their fair share of tax.