Uber has won a temporary reprieve from the UK’s tax authority, HMRC, in an ongoing VAT dispute that could have major implications for both the ride-hailing giant and its drivers.
At the centre of the dispute is whether Uber should pay VAT on the entire fare paid by customers or only on the commission it takes from each trip. Since 2022, Uber has paid over £1.4 billion in VAT while contesting this issue.
The case gained new momentum after rival firm Bolt successfully argued that it qualified for the Tour Operators’ Margin Scheme (TOMS), which allows companies to pay VAT only on their portion of the fare — not the full amount. That legal victory prompted HMRC to hold off on enforcing further VAT demands against Uber until Bolt’s appeal process concludes.
Uber’s UK earnings were estimated at £5.3 billion in 2023, making up about 18% of its global revenue. If HMRC eventually rules in Uber’s favour, the company may no longer need to add VAT to the full fare value. That could result in two major outcomes: lower prices for passengers, and possibly a larger share of the fare going to drivers.
If VAT no longer needs to be charged on the full fare, Uber may be in a position to increase the percentage it pays drivers — a move that could go a long way in rebuilding trust and boosting driver retention.
Still, legal issues continue to shadow Uber in the UK. The company is facing a lawsuit brought by London’s black cab drivers, who claim Uber shouldn’t have received its operating licence from Transport for London. Uber denies any wrongdoing.
This case highlights the growing tensions in the gig economy, where tech platforms like Uber operate across shifting regulatory landscapes and face increasing scrutiny over taxation and worker rights.
Thanks for visiting DM News! If you’ve got a question, story, or anything you’d like to say, head over to DriverMatty.com — I’d love to hear from you! And while you’re there, don’t forget to check out my other websites and social media channels.
