THE NINE KEY ISSUES FROM 2025: From autonomous taxis to private hire VAT, we run through the big topics impacting the taxi trade

From national licensing reforms and tax changes to the dawn of autonomous taxis, 2025 was a pivotal year for the UK’s taxi and private hire vehicle sector. A broad range of regulatory, operational, and market developments unfolded across England, Scotland, Wales and Northern Ireland, reshaping how taxis (hackney carriages) and private hire vehicles (PHVs) operate. Below, we delve into ten of the most significant topics, from the Government’s national standards push and a parliamentary inquiry into licensing, to economic shake-ups, technological advances, and the evolving app-based market, all as reported in TaxiPoint’s coverage throughout 2025.

National Licensing Standards on the Horizon

One of the year’s defining themes was the move toward national minimum standards for taxi and PHV licensing. After years of a patchwork of local rules, the Department for Transport (DfT) signaled plans to legislate uniform requirements across England. Transport Minister Lilian Greenwood confirmed in November that the Government “will legislate to address the inconsistent standards of taxi and private hire vehicle driver licensing,” considering measures on out-of-area licensing, national standards and stronger enforcement. This followed high-profile safety reports (such as the Casey Review) that highlighted how inconsistent local checks can compromise passenger safety. If enacted, baseline national standards would, for the first time, impose common safety and accessibility checks on all drivers and vehicles, a move the trade hopes will level the playing field. Many in the industry cautiously welcomed the concept, seeing a chance to eliminate “licence shopping” by drivers seeking easier conditions. A national rulebook promises clarity and fairness, though councils used to setting local criteria worry about losing autonomy. As one taxi vehicle supplier warned, any nationwide rules will only work if industry experts help shape the details of driver and vehicle requirements.

Parliament Probes Taxi and PHV Licensing

In parallel with the DfT’s efforts, MPs on the House of Commons Transport Committee launched a wide-ranging inquiry into taxi and PHV licensing standards. Through late 2025, the committee gathered evidence on whether the current “patchwork of local rules” adequately protects passengers and drivers . Early findings underscored inconsistent standards between areas. Committee chair Ruth Cadbury notably warned that the lack of common rules has encouraged “licence shopping”, where drivers obtain a licence in whichever jurisdiction has the least onerous checks, even if they work elsewhere. Dozens of stakeholders, from local councils and trade bodies to major operators like Uber, Bolt and Veezu, submitted written evidence or appeared in hearings. Topics under scrutiny included safety vetting disparities, varying driver training requirements, and whether local licensing authorities have enough enforcement powers. The inquiry’s final report (expected in early 2026) is poised to recommend reforms that could overhaul an “outdated framework” of laws dating back decades. TaxiPoint has called this inquiry a rare opportunity to reshape the future of the industry. Many anticipate the committee will urge moving toward national standards or even shifting certain licensing duties to regional bodies. For now, the industry keenly awaits MPs’ conclusions, which could guide legislation in 2026 and beyond.

Clamping Down on Cross-Border Work

Closely tied to licensing reform is the challenge of cross-border hiring, when taxis or PHVs licensed in one area operate predominantly in another. This loophole, legal under current law, led to an explosion of out-of-area operations in recent years. The starkest example has been Wolverhampton City Council, which became a licensing hub for drivers from all over the country. In 2025 it was reported that around 96% of Wolverhampton-licensed drivers live and work outside the city’s boundaries. Local authorities and driver associations argue this phenomenon undermines local oversight and passenger safety. Because drivers, vehicles and operators only need to be licensed by the same one authority, some choose an area with easier tests or lower costs, then work elsewhere, leaving the councils where they actually operate unable to enforce all standards.

During 2025 there were growing calls to “close the cross-border gap.” The DfT indicated it is considering new legislation to address out-of-area working, potentially by shifting licensing to larger regional bodies and granting nationwide enforcement powers. A consultation is expected on making combined local transport authorities responsible for taxi/PHV licensing over wider regions, which officials say could improve consistency and better link licensing fees to enforcement in the areas where vehicles actually operate. In the meantime, some councils forged partnerships to tackle rogue out-of-area drivers, for example, Wolverhampton officers joined operations in other cities to check vehicles licensed in Wolverhampton but working elsewhere. While operators argue that technology and regional demand naturally ignore council boundaries, the consensus in 2025 was that unchecked cross-border hiring has gone too far. Expect momentum in 2026 for new rules that ensure any vehicle on the road can be stopped and scrutinised, regardless of which authority’s plate it wears.

Debate Over Capping Private Hire Numbers

Another fiercely debated issue in 2025 was market saturation and whether there are too many PHV drivers in some areas, and if so, whether regulators should impose caps. In several UK cities, taxi driver associations urged authorities to cap PHV licences to curb oversupply. In Glasgow, for instance, the cab trade fought to maintain an existing limit of 3,450 private hire cars. A petition led by Unite’s Glasgow cab section warned that lifting the cap would “trigger a flood” of extra vehicles, undermining driver livelihoods, passenger safety and accessibility. Campaigners noted that all 1,420 Glasgow hackney taxis are wheelchair-accessible, unlike most PHVs, so uncontrolled PHV growth, they argued, could reduce transport options for disabled passengers. Similar calls for PHV caps echoed in Edinburgh, where one veteran cabbie described an unchecked influx of private hires as “like the wild west” leading to dwindling earnings for full-time drivers. In London, both taxi and private hire representatives likewise cited an oversupply of PHVs (over 100,000 licensed in the capital) causing congestion and falling incomes, and some urged the Mayor to use any available powers to freeze numbers.

However, the push for caps is far from unanimous. The Licensed Private Hire Car Association (LPHCA), who represents PHV operators, came out strongly against any cap on private hire driver numbers. In evidence to MPs, the LPHCA argued that quantity controls “only make sense” for taxis (which can ply for hire on streets and ranks) and not for pre-booked PHVs. Since PHVs do not cruise or rank in public space, the group says limiting them would not solve congestion or emissions issues and would only constrain consumer choice. The Department for Transport’s own guidance has long advised against restricting vehicle numbers except in special circumstances, a point the LPHCA highlighted to oppose what it sees as market intervention. This split in viewpoints, taxi drivers and some local leaders on one side, versus major PHV operators on the other, remained sharp through 2025. With the Transport Committee inquiry examining “market balance” in the sector, the question of whether to cap ride-hail driver numbers or leave it to market forces will likely persist into 2026.

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VAT Shake-Up Levels the Playing Field

A landmark change arrived in the Government’s Autumn Budget 2025 that will significantly affect the industry’s economics. Chancellor Rachel Reeves announced that full 20% VAT will now apply to all private hire trips, closing a long-disputed tax loophole and ending the use of the Tour Operators’ Margin Scheme (TOMS) by ride-hailing firms. For nearly a decade, large app-based operators had used TOMS (a mechanism originally meant for travel agents) to pay an effective VAT rate far below 20% on their share of the fares. This gave multinational platforms a significant cost advantage over traditional taxi companies and smaller operators who were bound to the standard VAT on their commissions. The LTDA (Licensed Taxi Drivers’ Association) hailed the Budget decision as “a defining moment” that would finally restore tax fairness in the sector. LTDA General Secretary Steve McNamara praised the closure of the TOMS loophole, saying it had cost the UK “billions” in lost revenue and skewed competition. “For years, global behemoths like Uber exploited [TOMS] to pay less than 5% on billions in revenue… This change levels the playing field so competition is based on service and quality, not tax avoidance,” McNamara said.

Under the new rules, from January 2026 ride-hail companies will have to charge 20% VAT on their share of the fares (or on the full fare in London, where operators act as the principal supplier). Industry watchers expect fare increases as a result, especially in London where Uber and others must now add VAT to the whole trip. The change resolves years of legal uncertainty, including court battles and HMRC disputes, over how gig-economy transport should be taxed.

Smaller operators, who had long felt disadvantaged, welcomed the reform as ending an unfair subsidy for their bigger competitors. But not everyone is pleased: Uber’s UK General Manager warned that higher fares will mean fewer riders and “less work for drivers, when people are already struggling with the cost of living”. Ride-hailing platforms will now have to decide whether to absorb some of the VAT cost, alter driver commission structures, or pass it entirely to passengers.

Surge Pricing Under Fire

In the app-based private hire market, dynamic pricing (or surge pricing) became a flashpoint this year. Ride-hailing platforms use dynamic pricing algorithms to adjust fares in real time based on supply and demand, raising passenger prices during peak periods or when drivers are scarce. Companies argue this model balances the market by incentivising more drivers to work when riders most need them. However, 2025 saw mounting criticism of how surge pricing actually affects drivers and customers. The GMB union, which represents many private hire drivers, launched a survey in December to gather driver views on dynamic pricing, citing “growing frustration” among members about opaque fare calculations. Many drivers reported daily issues with fluctuating fares and a lack of transparency on how rates are set. Because the exact algorithms are proprietary, drivers often do not know why a trip paid £10 one day and £7 the next, even with similar distance and demand. Crucially, drivers suspect that surge premiums don’t fully reach their pockets.

The GMB survey aimed to document these concerns and push for greater pay transparency from platforms. It’s part of a broader scrutiny of ride-hail business models as unions and regulators ask whether dynamic pricing is unfair during emergencies (such as train strikes or bad weather, when surge fares peak). In response, companies like Uber insist that drivers ultimately benefit from higher-demand periods and that without surge pricing, passengers would simply face longer wait times or no cars at all. Nonetheless, the issue gained enough traction in 2025 that it prompted talk of potential oversight. The topic even reached Parliament’s inquiry: MPs quizzed Uber and others on how pricing algorithms work and whether drivers can earn a sustainable living under them. With driver groups calling for clarity, or even regulation of surge practices, the dynamic pricing debate remains heated.

Driver Earnings and Commission Controversies

Beyond fares, driver take-home pay in the private hire sector came under the microscope in 2025. A revelation that grabbed headlines was Uber’s update of its UK driver terms and conditions, which for the first time explicitly stated that the company’s service fee can range as high as 49% of the passenger fare. In other words, on certain trips nearly half of what a rider pays may go to the platform and running costs rather than the driver. This formal disclosure of a 3% up to 49% commission range, inclusive of VAT, confirmed what many drivers had suspected. Uber maintained that this “service fee” covers its platform costs, insurance, tech, support, and driver benefits, and that the percentage varies trip-by-trip based on factors like distance, discounts, and demand. Nonetheless, the App Drivers and Couriers Union (ADCU) blasted the new terms as having a “devastating impact” on drivers, who were required to accept them by early 2026 or lose access to the app. ADCU President Cristina Ioanitescu warned that a commission that could “jump to 49%” leaves “no one able to earn a decent living” and makes driver incomes highly unpredictable.

Green Transition Faces Bumps in the Road

In 2025 the drive toward cleaner, electric vehicles (EVs) in the taxi and PHV fleet accelerated – but so did awareness of the hurdles involved. Many cities have introduced low-emission zones or stricter vehicle age limits, effectively pushing drivers to switch to hybrid or electric cars. The transition has industry-wide support in principle (both to meet climate goals and to reduce urban air pollution), and the Government has extended Plug-in Taxi Grants and funding for charging infrastructure up until April 2026. Yet for working drivers, going electric is often easier said than done. A survey in autumn 2025 revealed that cost remains the number-one barrier stopping cabbies from switching to a fully electric taxi, followed closely by concerns about driving range and charging access. Electric taxis (such as the TX electric London black cab) cost £60k–£70k or more, a steep investment especially after a pandemic downturn. As one driver put it, many are wary of taking on “£100,000 finance for a vehicle” in the current climate. Even with government grants, the upfront price makes some hesitate to retire their diesel workhorses.

On the policy front, 2025 brought a mix of carrot and stick. The Autumn Budget included new funds to expand charging networks and extended the Plug-in Taxi Grant to 2030, measures applauded by operators as “crucial… to make EVs cost-effective for drivers”. At the same time, the Chancellor unveiled a future road-user charge for EVs: from 2028 electric cars will pay 3p per mile (hybrids 1.5p), tracked via annual mileage. This pending tax, essentially the end of EVs’ exemption from fuel duty, drew sharp criticism from taxi/PHV firms who fear it will “derail fleet electrification” for high-mileage professionals. Addison Lee’s Chief Operating Officer estimated the EV levy could cost £840 per year for an EV driver in their fleet (on top of other recent incentive removals), calling the environment “increasingly unviable” and noting the company had to reintroduce some hybrid vehicles to maintain service levels. Others urged the Government to exempt taxis and PHVs from the 2028 charge, pointing out that a full-time cab can log double or triple the mileage of a private car, meaning a disproportionate financial hit that could ultimately make fares less affordable. As Freenow by Lyft UK’s manager Danny O’Gorman put it, “the average EV driver does 8,500 miles (£255 in charges), but taxis and PHVs routinely exceed this… without an exemption, the cost will unfairly punish drivers and passengers” .

The march toward electrification continued in 2025, with many drivers embracing hybrids or EVs especially in cities like London (where over 40% of black cabs are now zero-emission capable) and Norwich (where a major fleet is 75% hybrid or electric). But the year also highlighted the real-world challenges, economic and logistical, that governments must address to reach net-zero goals without squeezing drivers out of the trade. Expect ongoing efforts in 2026 to provide more charging hubs, financial support, and smart policies so the taxi and PHV sector can go green in a sustainable way.

Robotaxis on the Horizon

What once seemed futuristic edged closer to reality in 2025: the emergence of autonomous taxis. While truly driverless cabs are not a common sight on UK streets yet, the past year saw major ride-hailing players laying groundwork for self-driving vehicle trials. In December, Lyft confirmed plans to deploy “dozens” of autonomous vehicles in London in 2026 through the Freenow platform. This pilot will use Baidu’s Apollo Go robotaxi technology, marking the first deployment of Baidu’s autonomous cars outside Asia, and Londoners will be the first in Europe to experience them. The vehicles, fully electric and purpose-built for ride-hailing, are designed to operate without a safety driver. Lyft’s CEO David Risher said riders in London will be “the first outside Asia to experience Baidu’s Apollo Go vehicles,” with initial testing of a fleet of about 50 units pending regulatory approval and plans to “scale to hundreds” of AVs over time.

On the same front, Uber announced a partnership with Baidu to trial Apollo Go autonomous cars on its app in London, also aiming for the first half of 2026 subject to regulators’ green light. These coordinated moves by the two ride-hail rivals suggests a race to incorporate robotaxis into their networks. Waymo have also committed to the London market in 2026 too.

The UK government has been actively encouraging autonomous vehicle (AV) development, with a vision to be a leader in AV deployment. In fact, the Transport Secretary endorsed the London trials as “another vote of confidence” in the UK’s autonomous ambitions. Trials will initially be limited, likely confined to specific zones or times, and TfL (Transport for London) has emphasised that safety and accountability will be paramount before any wider rollout.

For the taxi and PHV industry, the arrival of AV technology is both exciting and unsettling. Autonomous taxis could eventually transform operations, reducing labour costs and potentially offering 24/7 service. Platforms are pitching AVs as a complement to, not replacement for, human drivers, a “hybrid network” in Lyft’s words, where driverless cars handle some trips while human drivers focus on others. Nonetheless, driver organisations watch warily, knowing that if robotaxis prove viable, it could impact driver jobs and earnings in the long run. 2025’s developments were mostly preparatory, securing partnerships, informing the public, and navigating regulatory pathways.

The first actual driverless taxi rides for paying customers in the UK are expected in 2026. As those trials commence, they will test not just technology, but also public trust and regulatory frameworks. The industry in 2025 has started bracing for questions that once belonged to science fiction: how to insure autonomous cabs, how to licence them, and how traditional taxi services can coexist with vehicles that have no driver at all.