VAT ON PRIVATE HIRE FARES: What taxi drivers are saying on the ranks
- Perry Richardson
- 3 minutes ago
- 3 min read
Talk of a reported 20% VAT charge being applied across all private hire vehicle (PHV) operator bookings has unsurprisingly stirred up widespread debate across the industry.
While nothing is yet confirmed by the Chancellor, the possibility has prompted a wave of reaction, particularly among taxi drivers and cabbies using app-based platforms to find fares.
At the centre of the discussion is Uber’s Supreme Court loss, which forced the company to begin charging VAT on fares. Since then, there’s been ongoing debate as to whether that model applies to other operators, inside and outside on the capital.
One driver commented: “I was under the impression Uber already had to apply VAT. Riders will just end up paying it.” That assumption is broadly true, at least in London. Uber was forced to restructure its pricing and driver commissions to reflect the VAT inclusion. But a Supreme Court ruling in July 2025 clarified that outside London, other operators are not required to adopt Uber’s principal model.
This means most PHV firms operating regionally remain exempt from VAT on the full fare, since they act only as booking agents and pass the full fare to self-employed drivers.
Still, some drivers are concerned about fairness and inconsistency. “I don’t pay VAT as I don’t qualify,” one subcontractor said. “The firm I work with pays VAT from my subs. Why should fares be charged VAT if I decide the price?”
Others raised practical concerns around how any new VAT charge would be structured. “Will it be fare plus VAT or fare including VAT?” one poster asked. The distinction matters. Adding VAT on top of existing fares could price out riders, while including it in the current fare would reduce driver earnings unless the fare rises.
The impact on public demand was also mentioned. “Since fares last increased, I’ve seen more people waiting for the bus,” one driver noted. “If VAT is added, that’ll only get worse.” There’s also uncertainty about contracts. “Will school transport rise 20% too?” one asked.
Several respondents expressed strong opposition to the approach, with one driver saying they would “hand in their plates” if their company deducted another 20% for VAT. Others argued that VAT should be even higher for large operators. A few even welcomed VAT across the board, saying it would level the playing field and encourage more passengers to use hackney carriage taxis instead.
But not all were convinced it would be handled fairly. “Any operator with an app will get hit, plus back pay,” said one.
Drivers operating private hire firms solo also raised possible legal grey areas. “What happens when you’re an owner-operator with no other drivers, running under your own licence but not VAT registered?” This point highlights the complexity of applying blanket tax rules to a fragmented sector with multiple operational models.
One user summed up the regulatory frustration: “When it’s tax, they move fast. When it’s cross-border hiring or safety, they take their time.”
The online discussion among TaxiPoint readers shows that a potential VAT charge has raised a bucket load of questions around legality, fairness, and system design. A one-size-fits-all tax model is unlikely to work for a trade built on regional rules and mixed fleet operations.
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Whether the Autumn Budget will confirm the 20% VAT charge on all PHV bookings remains to be seen. But the private hire sector appears to be preparing for change, with many warning of reduced margins, fewer bookings, and rising dissatisfaction if a clear and fair approach is not adopted.
