Uber UK General Manager says some drivers may be ‘better off’ registering for VAT after Budget change
- Perry Richardson
- 4 minutes ago
- 3 min read
Many London private hire drivers could be financially better off registering for VAT following recent rule changes, according to Uber’s UK General Manager Andrew Brem, who said some may benefit from joining the VAT Flat Rate Scheme depending on their individual circumstances.
In an exclusive interview, Brem confirmed that driver pricing in London will now become exclusive of VAT. This means drivers who are VAT-registered will receive 20% VAT from Uber on top of the agreed trip payment, while those who are not registered will receive only the base trip payment.
“We recognise the addition of VAT is a change for London drivers and they might want to take tax advice on the implications for them,” Brem said. “It will depend on individual circumstances but many drivers will now likely be better off if they register for VAT and, potentially, access the Flat Rate Scheme.”
Uber has arranged for several independent accounting firms to provide advice to drivers on whether VAT registration is appropriate. According to Brem, this support includes guidance on how the Flat Rate Scheme could affect take-home earnings, although he stressed that decisions should be based on individual financial positions.
UK General Manager Andrew Brem warns passengers face higher fares as VAT changes alter driver pay structure in the capital
The VAT shift follows changes announced at the Budget affecting ride-hailing services in London. Brem was openly critical of the move, warning that the change would have a knock-on effect across the market.
“I’m deeply disappointed with the new VAT rules for London,” he said. “As soon as the Budget was announced, I was publicly outspoken about them: there’s no escaping that a VAT hike means higher prices for passengers in the capital, which likely means less work for drivers.”
Under the revised structure, fares charged to passengers in London will reflect the addition of VAT. For operators such as Uber, which must treat themselves as the principal in the transaction following previous court rulings, VAT must be applied to the full fare rather than solely on commission.
For drivers, the operational impact hinges on VAT status. Those registered for VAT can reclaim input VAT on eligible business expenses and may retain a proportion of collected VAT under the Flat Rate Scheme, depending on turnover and cost profile. However, VAT registration also introduces additional administrative requirements and reporting obligations.
The longer-term effect on passenger demand also remains uncertain as higher fares may dampen trip volumes in price-sensitive segments. For drivers, any reduction in demand could offset potential gains from VAT optimisation strategies.
Brem’s comments signal a shift in focus towards tax planning and financial structuring for some of London’s private hire drivers. With VAT now embedded in the fare structure within London, registration decisions are likely to become a key commercial consideration for drivers operating on platforms such as Uber in the capital.
Brem said in full: “I’m deeply disappointed with the new VAT rules for London. As soon as the Budget was announced, I was publicly outspoken about them: there’s no escaping that a VAT hike means higher prices for passengers in the capital, which likely means less work for drivers.
“Going forward, driver pricing will become exclusive of VAT. This means that drivers who are registered for VAT will receive 20% VAT from Uber on top of the trip payment. Drivers who are not registered for VAT will only receive the trip payment.
“We recognise the addition of VAT is a change for London drivers and they might want to take tax advice on the implications for them. It will depend on individual circumstances but many drivers will now likely be better off if they register for VAT and, potentially, access the Flat Rate Scheme. Uber has made arrangements with several independent accounting firms from which drivers can obtain independent tax advice, including whether VAT registration may be suitable for them.”
