Private hire and minicab passengers across the UK could face sharp price rises if the Government introduces a new 20% VAT charge — dubbed the “Taxi Tax.”
Industry leaders have warned that the move would hit millions of people who rely on taxis and private hire vehicles, particularly for airport and train station transfers. They argue that drivers, already under pressure from high fuel and insurance costs, would be forced to pass the extra charge on to customers.
According to reports, ministers are reviewing whether VAT should be applied to all private hire bookings, something currently avoided by many smaller operators due to the £90,000 turnover threshold.
If the tax is introduced, trade bodies fear it could mean a significant rise in fares just as families are already struggling with the cost of living.
A spokesperson for one industry group said:
“This so-called Taxi Tax will make essential journeys more expensive, from school runs to airport trips. It will especially hit vulnerable people and those in rural areas who don’t have access to reliable public transport.”
Holidaymakers are expected to be among the worst affected, with taxi and minicab journeys to and from airports rising in price at a time when flight costs are already high.
The move has also raised concerns about driver earnings, with some worried that fewer bookings will come in if customers see prices jump overnight.
The Government has yet to confirm whether the proposal will be included in upcoming legislation.
What it means if introduced
- Passengers: Likely to pay 20% more per journey.
- Drivers: Risk losing work if demand falls, though some could see higher turnover.
- Operators: Would face new accounting responsibilities and VAT reporting.
The industry is now urging ministers to reconsider, warning that the change could unfairly punish both drivers and passengers across the country.
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