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New tax rules for taxi and PHV industry: What details do drivers need to provide?

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Taxi and private hire vehicle (PHV) drivers will have to provide more information to their operators as part of a new law that requires digital platforms to report their earnings to HMRC.

The new law, which will come into effect from January 2025, aims to ensure that all businesses operating through digital platforms pay their fair share of tax and comply with the national revenue system.

According to the law, digital platforms include any online service that connects customers with suppliers of goods or services, such as taxi and PHV operators, food delivery companies, freelance workers, and short-term accommodation providers.

From January 2024, all digital taxi and PHV operators in the UK will have to collect and store revenue data for all their registered drivers. This data will then be reported annually to HMRC, starting from January 2025.

To comply with the law, drivers will have to provide their operators with additional details, such as their National Insurance number, full name, address, and date of birth. These details will help HMRC identify the drivers and assess their tax liabilities.

The law will affect an estimated 2-5 million businesses that offer services through digital platforms in the UK. The Government hopes that the law will create a level playing field for businesses in this sector and support the taxation requirements and national revenue systems.

Drivers who fail to provide the required information to their operators or who provide false or misleading information may face penalties from HMRC. Operators who fail to collect, store, or report the data may also face sanctions.

The law is part of a wider initiative by the Government to tackle the tax gap, which is the difference between the amount of tax that should be paid and the amount that is actually paid. According to HMRC, the tax gap for 2021-22 was £31billion, of which £5.4 billion was attributed to the hidden economy, which includes businesses that operate through digital platforms.

The Government hopes that the new law will reduce the tax gap and increase the tax revenue that can be used for public services and infrastructure.


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