There is reports that Uber is attempting to distance itself from Chancellor Rachel Reeves and the government’s proposed VAT changes for private hire journeys — widely referred to within the trade as the “taxi tax”.
The proposed policy would see VAT applied to the full fare of private hire journeys booked through ride-hailing platforms, rather than just the company’s commission. This would remove the long-standing use of the Tour Operators’ Margin Scheme (TOMS), which Uber and similar platforms have previously relied on.
According to The Telegraph, Uber has warned that the changes could lead to higher passenger fares. However, the report also highlights that Uber is exploring changes to its driver terms and operating model in a bid to avoid being classed as the supplier of the journey — and therefore avoid being liable for VAT on the full fare.
Under this approach, Uber would seek to present itself purely as a technology platform, with the driver positioned as the principal supplier of the journey. If successful, VAT responsibility would shift away from Uber and instead sit with individual drivers — most of whom are not VAT registered.
The article notes that this move comes amid growing political and industry scrutiny, with concerns that such changes could create confusion across the sector and lead to further legal challenges.
DM News Commentary
From a taxi and private hire industry point of view, this is a familiar pattern.
Uber isn’t just opposing the “taxi tax” — it’s attempting to restructure its contracts to sidestep it. By rewriting driver terms, Uber appears to be trying to avoid being treated as the supplier, while still retaining control over fares, bookings and the customer relationship.
That’s a difficult position to defend. Uber has already faced legal rulings confirming its level of control over journeys, and attempting to reverse that through updated contracts could reopen wider debates around liability, regulation and driver status.
For drivers, this raises serious concerns. Shifting VAT responsibility — even indirectly — risks pushing more administrative burden and uncertainty onto individuals who simply want to earn a living. Most private hire drivers do not want VAT paperwork, HMRC exposure, or unclear responsibility over pricing and tax.
At DM News, we believe fair taxation across the sector is important, but reforms need to be transparent and workable. Any attempt to pass complexity down the chain to drivers is unlikely to end well and risks destabilising an already pressured industry.
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