Posted on the 21st November 2025 in PHTM News

CHANCELLOR'S PROPOSED TAXI TAX COULD HAVE DAMAGING CONSEQUENCES FOR VULNERABLE PASSENGERS

Layla Barke-Jones, Dispute Resolution Partner at Aaron & Partners, represented Delta Taxis in the case that successfully defended the right of operators outside London to avoid charging VAT on all fares.

But with reports suggesting the Chancellor is considering forcing all operators to charge VAT in the Autumn Budget, Layla warns the move would undo years of legal progress.

She said: "We are very concerned at the murmurings around the potential for Rachel Reeves to announce a “taxi tax” in the upcoming budget. Whilst a consultation on VAT in private hire was launched by the previous government to address the potential inequality that obligatory VAT on private hire fares would introduce, the recent Supreme Court judgment brought long-awaited clarity to thousands of private hire operators.

“The highest court in the land confirmed that the long-standing business models used by operators up and down the country remain lawful – and that VAT isn’t therefore automatically required to be charged on private hire fares.

“That outcome, which our client and other operators fought hard for, helped protect passengers from consequential fare increases, while allowing local businesses to continue operating in a way that suits their size and structure.

"Against that backdrop, proposals for a so-called 'taxi tax' raise serious questions. Forcing VAT on all fares would require a change in the law, overriding the clarity provided by the courts in the summer, and could place an unfair burden on small operators who are already managing tight margins.

"Most vitally, we must not lose sight of who this impacts. Private hire taxis are a vital service for people who rely on them for essential everyday travel: particularly elderly passengers, disabled people, and lower-income households.

“These are the very groups who would feel any cost increase most sharply. We urge policymakers to tread carefully and consult widely, including crucially passenger groups, before making decisions that could have such far-reaching consequences."


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