Posted on the 24th September 2025 in PHTM News

CLARIFICATION OVER TELEGRAPH NEWSPAPER ARTICLE: "REEVES PLOTS TAXI TAX"

Jonathan Main, VAT partner MHA, told PHTM: “I read the article in the Daily Telegraph with interest and thought it would be worth providing clarification of the VAT position.

While it is certainly true that the Labour Government may use the Budget in November to raise additional tax revenue, the private hire sector is not necessarily an easy target for the Chancellor.

As things stand, any operator based outside London can rely on existing HMRC guidance to only pay VAT on account work sold as principal, charges to drivers for access to passenger bookings, and fares earned by an operator’s employees.

This position was reinforced very recently by the Supreme Court victory for operators outside London.

In addition, Bolt continues to defend its decision to only pay VAT on the profit earned on fares, rather than the full fares paid by passengers. The most recent victory for Bolt was published by the Upper Tribunal in March 2025.

I understand that the case will be heard again in the Court of Appeal in mid 2026. The profit earned by Bolt would reasonably equate to the charges it previously made to drivers for access to passenger bookings.

If HM Treasury decides to target the private hire sector as a source of additional tax revenues, it will need to change primary VAT law to require operators to pay VAT in full, regardless of both the legal relationship with drivers and the ongoing litigation with Bolt.

This is certainly possible but at the very least would require very careful consideration of existing private hire licensing regulations across the UK, a clear definition of the type of journeys provided by operators which would be affected by this change, and the self-employed or worker status of drivers.

Without this, HM Treasury could not be certain how much revenue would be raised, and the potential for future challenges by the sector. There are far easier targets for the Chancellor that will raise more revenue and have less potential to be challenged in future court processes.

In my view, operators should continue to push the Treasury to publish its thoughts on the Government consultation, so that the sector can engage in more meaningful dialogue towards an outcome that suits businesses, passengers, and HMRC."


Read another story