Posted on the 26th November 2025 in PHTM News

GOVERNMENT RESPONDS TO VAT CONSULTATION ON PHV SECTOR - NO ‘TAXI TAX’

 

 

Jonathan Main, VAT Partner at MHA said, "The Government has just published its long-awaited response to the private hire consultation launched in April 2024. It looks like the worst possible outcome for ride hailers such as Uber and Bolt, as opposed to the status quo for more traditional private hire operators."

•  NO CHANGE for private hire operators who act as agents for cash fares

•  NO CHANGE for private hire drivers

•  BIG CHANGE - NO TOMS - Private hire operates such as the ride hailing apps will no longer be able to use the Tour Operator Margin Scheme to reduce their VAT liability

To summarise the outcome of the consultation:

• The government will not amend VAT legislation to allow PHVOs to act as agents for tax purposes in all cases.

• The 20% standard rate of VAT will continue to apply to PHV fares charged by VAT registered businesses.

• A large tax break for the sector, in the form of a reduced or zero rate or a bespoke margin scheme, cannot be justified in a context where the government needs to take difficult decisions to ensure that key public services can continue to be funded.

• From 1 January 2026 PHV operators such as UBER and other ride hailing apps will no longer be able to use the Tour Operator Margin Scheme (TOMS) to reduce their VAT liabilities

• The government has reiterated its view that the TOMS does not apply to the PHV sector, and will shortly legislate to this effect.

•  The government will keep legislation relating to taxis and PHVs under review, in order to ensure that customer safety is prioritised alongside a fair market for firms of different types and in different places.

 


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