The Treasury has not announced a new consultation, review or timetable for further work on VAT for taxi and private-hire fares after being questioned by Richard Holden MP.
Mr Holden asked the Chancellor on 28 August 2026 whether the Treasury would consult on changes to VAT on taxi and private-hire journeys. Financial Secretary to the Treasury James Murray issued the written response on 7 September.
The Treasury restated that private-hire services supplied by VAT-registered businesses are subject to VAT at the standard rate of 20%.
The response referred to the Government’s Budget 2025 decision to end the use of a tour-operator VAT administration scheme by some large private-hire operators. That change came into effect on 2 January 2026.
The minister said the change did not affect smaller operators outside London where drivers contract directly with passengers. He also said black-cab drivers were unaffected by the change to the Tour Operators’ Margin Scheme, known as TOMS.
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The written answer was issued by the Treasury, rather than the Department for Transport.
The Government’s formal response to the earlier private-hire VAT consultation said it would not change legislation to allow PHV operators to act as agents in all cases. It also ruled out introducing either a new VAT margin scheme or a reduced VAT rate for the sector.
The previous consultation ran from 18 April to 8 August 2024 and received 86 responses.
In its consultation outcome, the Government said it would legislate to exclude taxi and private-hire suppliers from TOMS, except where services are supplied alongside certain other travel services. Ministers also said taxi and PHV legislation would remain under review, with the stated aim of balancing passenger safety and a fair market.
The Government’s published VAT notice states that taxi and private-hire journey fares are normally standard-rated supplies.
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