Taxi Driver Online

This article is all over the place with its terminology - taxis, minicabs, private hire etc.

But presumably the main take is that VAT will be payable on the full fare by the circuits as opposed to the drivers, on private hire at least. But what about mixed HC/PH fleets etc?

Anyway, given the loose terminology associated with this kind of stuff, we'll need to see the detail before being able to comment properly


Rachel Reeves to defy Uber with ‘taxi tax’ on private hire cabs

https://www.thetimes.com/uk/politics/ar ... -w39grdd0r

Uber, Bolt and Veezu warn chancellor that fares would ‘rise dramatically’ if she imposed a flat 20 per cent VAT on all journeys

Rachel Reeves is expected to push ahead with plans to impose VAT on Uber and other private hire taxi services in her budget despite warnings that it could increase fares for poorer workers who rely on them for late and early shifts.

At present VAT is charged on the profit margin made by taxi companies rather than on the fare itself, except in London. This means that the effective rate of VAT is between 3 and 5 per cent.

Because cab drivers are self-employed, they are not required to register for VAT unless their taxable earnings exceed £90,000 a year. It means that no tax is due on fares.

The chancellor is expected to remove the exemption enjoyed by minicab and private hire companies, which are treated as intermediaries, and push ahead with a blanket rate of 20 per cent VAT on all journeys, raising about £1 billion a year.

Reeves has abandoned plans to raise the basic rate of income tax, meaning that she needs to raise as much as £35 billion with a “smorgasbord” of smaller tax increases on November 26.

Uber has warned that cab fares would “rise dramatically” if Reeves added VAT on fares, a move it described as a “taxi tax”. It would have the greatest impact on the most vulnerable passengers and represent a “new tax on working people”, it said.

However, the Licensed Taxi Drivers’ Association (LTDA), which represents black cab drivers, has said calling it a “taxi tax” was deeply misleading and backed changes to create a “level playing field”. Black taxi drivers have to charge the full rate of VAT if they earn more than £90,000 a year.

Taxi companies pay a reduced rate of VAT under the Tour Operators’ Margin Scheme, which was originally set up for travel agents that buy and resell services, such as hotel rooms and flights, from other providers. Under the scheme, they pay a 5 per cent rate of VAT on the profit margin rather than the retail price.

HM Revenue & Customs argues that Uber and other private hire operators should not be able to use the scheme, and the issue has been the subject of years of litigation.

Steve McNamara, general secretary of the LTDA, said in a letter to Reeves: “This is not a level playing field; it is a distortion that disadvantages tens of thousands of our members who operate as small operators who adhere to the rules. This is a matter of principle and can only be addressed once and for all by legislative change. Large multinational companies operating in the UK should contribute their fair share to the Exchequer.”

In a separate letter to Reeves, the bosses of Uber, Bolt and Veezu said: “Adding VAT to passenger fares on minicab and private hire journeys would represent a new tax on working people, and a breach of Labour’s manifesto promise not to increase VAT.

“It would hit the most vulnerable people in society hardest and threaten tens of thousands of jobs. Fares would rise dramatically to cover the cost of a VAT hike.”

The Tories are opposed to the move. Richard Holden, the shadow transport secretary, said: “Labour can pretend this is some technical tweak, but it’s a straight VAT hike on the people who rely on private hire the most. Women trying to get home safely at night, workers on early shifts, families in rural towns — they’ll all be hit. And the chancellor knows it.

“Starmer hasn’t got the backbone to stop another tax raid and Reeves is scrambling to plug the black hole she’s created in the public finances. So instead of fixing the economy, they’re coming after ordinary passengers with a taxi tax that will price people off the road entirely.”

...then suddenly the t-word appears, but what does that mean, precisely? And I don't think that's correct anyway - the VAT is charged on the fees or commission paid by the drivers to the circuit as opposed to on the full fares by the circuit, and not on the profit margin as such?

All we know is that measures are being considered untill she announces it all we simply don't know

most of this has been the clueless chancellor putting ideas out to test public reaction

_________________
lack of modern legislation is the iceberg sinking the titanic of the transport sector

The Supreme Court has just decided that the passenger's contract is with the driver, so any VAT would apply only to those lucky buggers earning over £90,000.

Which can be counted on the fingers of Nelson's right arm.

Therefore, I'm quite certain the article refers to the VAT operators charge their account customers directly. So no tour company opt out.

The problem Uber, Bolt etc have is that they directly charge all their customers, whereas the majority of operators only bill their account customers directly.

So, in short, Uber and Bolt will have to raise their fares 20%, and the likes of me will not.

_________________
IDFIMH

I would say this is quite a 'malicious' thing to do.

But the boss of Bolt wouldn't understand what I was on about.

_________________
IDFIMH

A similar article from City AM, which seems a bit clearer.

https://www.cityam.com/cabbies-spark-ne ... -loophole/

_________________
IDFIMH

The only thing about Private Hire in the early release of the of the 'Office for Budget Responsibility - Economic and Fiscal outlook', that should only be released after the budget has been read.

Under the VAT section

4.17 In the pre-measures forecast receipts have been revised down by £0.8 billion in 2025-26
compared to March. This is primarily explained by the March 2025 Upper Tribunal decision
that ride-hailing services provided by private hire vehicle operators (PHVOs) can be within
the Tour Operators’ Margin Scheme (TOMS), reducing their VAT liabilities.

4.18 Over the rest of the forecast, VAT receipts are higher in each year and are forecast to be
£3.8 billion higher by 2029-30. In 2029-30, the pre-measures forecast is £3.8 billion
higher than March due to a higher forecast for nominal consumption and a higher expected
proportion of goods paying the standard rate of VAT. The measures announced at this
Budget increase VAT receipts by an expected £1.0 billion in 2029-30. Of this increase, £0.7
billion is from the Budget policy to exclude PHVOs from TOMS from January 2026, in
response to the court decision described above. The remaining £0.3 billion comes from
reducing VAT relief on Motability, measures aimed at reducing non-compliance and
collecting tax debt, and other measures. The indirect effects of the Budget policy package
lower VAT receipts by £1.0