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Will new HMRC taxi and PHV driver revenue rules impact industry recruitment and retention?
As of this year, taxi and private hire vehicle (PHV) drivers must now provide more information to their operators as part of a new law that requires digital platforms to report their earnings to HMRC.
In the lead up to the new rules going live, there were some concerns that the changes could affect the recruitment and retention of drivers working in the industry.
From January this year, all digital taxi and PHV operators in the UK will now collect and store revenue data for all their registered drivers. This data will then be reported annually to HMRC, starting from January 2025.
While the vast majority of taxi and PHV drivers accurately account their earnings and therefore will see no impact from these new changes to their earnings, there have been concerns that some drivers within the gig economy may also be under-reporting their income to also qualify themselves for government tax credit support typically offered to low-earners.
The scale of this practice remains unclear in the ride-hail sector, but these new regulations should put an end to submitting lower Self-Assessment tax returns. Consequently, drivers previously benefitting from tax credits may experience a loss of benefits and potentially face higher tax liabilities.
Three months into going live and there seems to be little or no impact on taxi driver recruitment or retention. The number of hackney carriage drivers have for some time been in decline across most regions of the country. The introduction of the new tax rules do not seem to have sped up the decline in the first quarter of 2024 and to be fair there were few concerns that the new rules would impact taxi drivers as much given they do not rely on operator income as much as PHV.
For PHV drivers recruitment, and critically retention, the jury is still out. Due to cross border hiring rules it is difficult to report what is causing peaks and dips between licensing authority driver numbers. Interestingly, Transport for London (TfL) recorded a loss of 166 PHV drivers in the last week, with only 39 drivers joining. But is this due to HMRC revenue checks, licensing authority migration or other new licensing guidelines put in place?
This legislative change is set to affect an estimated 2-5 million businesses operating via digital platforms in the UK. The Government anticipates that the law will ensure a fair competitive environment within this sector, alongside enhancing compliance with taxation and contributing to national revenue.
Non-compliance with these requirements, whether by drivers providing incorrect information or operators failing in their data management duties, will lead to penalties from HMRC, highlighting the seriousness with which these regulations are being enforced.
