Posted on the 2nd November 2026 in PHTM News

GOVERNMENT ANNOUNCES VAT CHANGES FOR LARGE PH & TAXI OPERATORS £50M THRESHOLD PROPOSED

The government has announced changes to the VAT treatment of private hire fares, due to take effect from 2 January 2028.

The changes are aimed at larger operators, with the government proposing a threshold of £50 million in annual passenger fare turnover.

Importantly, smaller operators are expected to be excluded.

WHAT IS CHANGING?

Under the new rules, larger operators acting as agents for drivers will be treated as supplying the transport service themselves for VAT purposes.

This means affected VAT-registered operators will have to account for VAT on the full passenger fare, rather than just their commission or booking fee.

WHAT DOES THE £50 MILLION THRESHOLD MEAN?

The proposed threshold is based on the total value of passenger fares handled by an operator – NOT its commission, income from booking fees or profit.

For example, an operator handling £60 million in passenger fares annually could fall within the new rules, even if it retains only a small percentage as commission.

The £50 million threshold is not yet confirmed and will be subject to consultation.

WHICH OPERATORS COULD BE AFFECTED?

The changes are aimed primarily at the largest private hire and taxi businesses, potentially including major booking platforms such as Uber and Bolt, alongside large national and regional operators.

However, some larger operators already account for VAT on the full passenger fare, so the changes may have little additional impact on them.

HMRC has not confirmed which individual companies will be affected.

WHAT ABOUT SMALLER OPERATORS AND DRIVERS?

• Smaller operators below the eventual threshold will not be brought within the new rules.

• No general new VAT registration requirement is being introduced for drivers.

• Existing VAT obligations will continue to apply.

WILL PASSENGER FARES INCREASE?

Possibly. HMRC acknowledges that passengers could face higher fares if affected operators pass on additional VAT costs.

The government estimates the changes will raise £385 million in tax revenue in 2028–29.

WHAT HAPPENS NEXT?

The government will consult on the final threshold and how the legislation will operate before the planned introduction on 2 January 2028.

The key point is that this is NOT a blanket new VAT charge on all private hire operators. The government intends to target larger businesses while excluding smaller operators from the new measure.


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