The Taxi Insurer head warns VAT hike could risk shrinking driver competitiveness
- Perry Richardson
- Sep 26
- 2 min read
The Head of Taxi Broking at insurance specialist The Taxi Insurer has warned that the addition of VAT to all taxi and private hire vehicle (PHV) fares could place thousands of drivers at a disadvantage and further damage an already strained sector.
David Sweeney, speaking amid growing reports that the Chancellor may introduce a flat 20% VAT charge across all taxi and PHV fares, said the measure could reduce demand for these services and shift passengers elsewhere.
Sweeney said: “If VAT is added to taxi and private hire vehicle fares, there’s a danger that it’ll make the drivers of those vehicles less competitive, and they’ll lose business to drivers of hackney carriages or those using apps.”
He added that this could see passengers opting for public transport instead, as higher costs could drive people away from taxi and PHV use. The taxi insurance expert also raised concerns about the wider environment drivers are operating in.
Looking ahead, Sweeney noted that a rise in insurance premium tax (IPT) could further impact driver costs. Although not yet proposed, he warned that it has risen from 5% in 1999 to 12% in 2017, where it currently stands.
The comments follow a wider industry backlash to the potential VAT changes, with operators, driver unions and politicians warning of severe effects on pricing, accessibility and employment conditions.
Sweeney added: “Such a hike in fares could push customers away from using these services and towards public transport. In a trade where there seems to be little support from the government, this certainly doesn’t help with what is already a very tough market.
“Having said that, a bigger concern for drivers is that a hike in insurance premium tax could be next – it has increased slowly over the years, from 5% in 1999 to 12% in 2017, where it has remained ever since.”
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