New HMRC taxi and ride-hail driver tax rules: How many cabbies are likely to be affected?

New laws have been introduced requiring taxi and private hire operators to report their drivers' earnings to Her Majesty's Revenue and Customs (HMRC) starting from January 2025.

But how many drivers will actually be affected by the new rules?

The legislation, known as the "Reporting Rules for Digital Platforms", aims to create a level playing field for all businesses operating within the digital marketplace. Under these rules, all taxi and private hire digital platforms will be obligated to collect and report revenue data from their drivers to HMRC.

Taxi drivers using app platforms such as FREENOW and Gett are already registered for tax checks as part of new licensing renewal requirements.

While these licensing checks, which started on 4 April 2022 in England and Wales, do not include any calculations, it does confirm a driver is registered for tax on their licensed taxi or private hire vehicle income.

The new taxi rules however now makes sure that the revenue is being accounted for in Self-Assessment tax returns. All revenue generated by Private Hire Vehicle (PHV) will come direct from operators and have a digital trail.

It is hard to know at this stage how many drivers are mis-reporting their digital revenue at this stage and by how much.

In the gig-economy, which includes food delivery apps, there has been some bigger issues where multiple users share accounts to work on the platform.

In Spring 2023, following an increase in immigration offences by gig workers in the region, Home Office teams stepped up action to tackle illegal working and arrested drivers working for companies including Deliveroo, JustEat and UberEats.

Given the higher regulation standards set in the taxi and PHV industry, when compared to the courier gig sector, it is again more difficult to put a figure on the number of drivers currently working fraudulently.

However, what these new rules eradicate is the potential for drivers sharing licences moving forwards. A driver allowing someone else to work under their name fraudulently would now have to declare all the earnings made under the licensee's name and pay all tax liability.