Uber drivers ‘squeezed’ as union warns VAT shake-up is crushing take-home pay
- Perry Richardson
- 5 minutes ago
- 2 min read
The App Drivers’ and Couriers’ Union (ADCU) has warned that Uber drivers are facing sharp falls in income following changes to VAT rules affecting the private hire sector.
The union said it has received a rising number of calls, emails and wage complaints from drivers since private hire and taxi journeys were excluded from the Tour Operators Margin Scheme (TOMS) from 2 January 2026. The Government measure means suppliers of standalone taxi and private hire journeys can no longer use TOMS unless the trip is supplied with other travel services.
ADCU claims the change has added to a wider income squeeze, with drivers reporting longer working hours, lower fares and reduced take-home earnings. The union said drivers are also facing higher vehicle, insurance and living costs.
The union argues that platform operators are seeking to protect margins by shifting the financial impact onto drivers through lower fares, higher commissions, opaque pricing and increased pressure on workers.
Union says drivers are reporting lower take-home pay as VAT changes, platform charges and operating costs squeeze private hire incomes.
ADCU also raised concerns over Uber’s contract arrangements, claiming newer terms place greater responsibility on drivers by framing the passenger contract as being held in the driver’s name. Reports in January said Uber had changed contracts outside London so drivers contract directly with passengers, affecting where VAT liability may fall.
The union is calling for government action on fare transparency, minimum wage and holiday pay enforcement, algorithmic management, dynamic pricing and protections against corporate tax and operating costs being transferred to workers.
The dispute increases pressure on an already tight operating model for private hire drivers, particularly for those carrying vehicle finance and insurance premiums. ADCU said it will continue supporting drivers pursuing wage complaints, collective representation and legal action over pay practices.
Cristina-Georgiana Ioanitescu, ADCU General Secretary, said: “The VAT reforms were introduced to standardise VAT treatment across the PHV sector, not to create another opportunity for global platform corporations to extract even greater profits from a workforce already under severe strain.
“Drivers are being squeezed from every direction while Uber continues to protect and expand its profits. We warned from the beginning that these VAT changes would not be absorbed by the platform companies but pushed directly onto drivers through lower fares, increased commissions and greater financial pressure.”
“The Government and regulators cannot continue to ignore what is happening in this sector. Urgent intervention is needed before thousands more drivers are pushed into financial crisis.”
