You wake up one morning, open your ride-hailing app, and—bam! your trusty Uber ride to the office or the pub has suddenly shot up by nearly 20%. That’s the grim reality looming for millions of UK passengers as Uber, Bolt, and Veezu the top dogs of private hire sound the alarm over impending tax hikes.
The trio has fired off a pointed letter to Chancellor Rachel Reeves, begging her to ease off the throttle on new VAT proposals that would slap an extra 20% tax on every single private hire vehicle journey. To the companies and their drivers, this is yet another tax, a wrecking ball aimed squarely at the backbone of the gig economy and the wallets of everyday riders.
Right now, Uber and co. pay VAT only on profits, which means fares stay a bit more reasonable for everyone involved. But a shift to charging VAT on entire passenger fares? That would rocket costs, forcing drivers to jack up prices or risk taking home less than minimum wage. The knock-on effect? Fewer drivers on the road, longer waits, and an inflated tab for anyone who dials a ride.
What makes this mess even messier is the disproportionate blow to the most vulnerable the night-shift worker, the disabled passenger, those living in rural areas with little transport alternatives. Fares could climb fat enough to price them out completely, making a simple ride an unaffordable luxury.
Industry pros warn this tax could also slam the hospitality and night-time economy, as fewer people pay for cabs home after a night out. That ripple effect threatens thousands of jobs tied indirectly to ride services.
Behind all the doom and gloom is a harsh economic reality: Britain’s national finances are bleeding. Reeves has promised tough measures to plug a £50 billion hole. But does penalising runners of private cabs even those barely scraping by really help balance the books? The industry says no.
For now, negotiations are ongoing, and a final decision is due at the November 26 budget. One thing’s for sure: if this ‘taxi tax’ goes through, don’t expect your ride home to be cheap or easy anytime soon.
