Healey closes VAT loophole for private hire firms

By the Editorial Team · Thursday, October 29, 2026

The UK government will require large private hire companies like Uber, Bolt, and Addison Lee to pay 20 percent VAT on their full fares starting in January 2028, aiming to raise £425 million in tax revenues by the early 2030s. The changes seek to standardize tax treatment across the industry but have raised concerns that higher costs could increase fares and impact affordability for passengers relying on these services.

The UK government has announced new tax measures aimed at large private hire firms, including major ride-hailing companies such as Uber, Bolt, and Addison Lee, which are expected to generate an additional £425 million in tax revenues by the early 2030s. The proposed regulations would require private hire operators surpassing a certain earnings threshold to pay the standard 20 percent value-added tax (VAT) on the full value of their fares, starting in January 2028.

This move follows a series of government efforts to close VAT loopholes within the private hire industry. Earlier in the year, the government ended the use of the tour operators’ margin scheme—a VAT relief initially designed for tour and holiday coach operators but also exploited by some ride-hailing companies. That change primarily affected firms operating under Transport for London regulations, with a notable impact on the London market. The new measures seek to extend VAT obligations more uniformly across operators nationwide, including those functioning under agency models outside the capital.

The Treasury forecasts that the tax adjustments will bring in around £385 million in the 2028-29 fiscal year, rising to £425 million by 2031-32. Officials have emphasized that the changes are intended to ensure a level playing field by removing inconsistencies in tax treatment among large private hire companies, especially as the market has grown and evolved rapidly in recent years.

However, the private hire industry has expressed concerns about the potential effects of the VAT increase on passengers. Bolt’s UK and Ireland senior general manager, Kimberly Hurd, described the decision as “disappointing,” citing data indicating that similar changes implemented in London previously led to an average fare increase of over 18 percent. Hurd highlighted that higher costs could disproportionately affect essential journeys such as commuting, attending medical appointments, or safe travel at night. She called on the government to consider the impact on riders and collaborate with the industry during the upcoming consultation to maintain affordability and service reliability.

Uber also voiced apprehension, emphasizing that any changes must be equitable for both passengers and drivers. A company spokesperson warned that the proposals might create a two-tier tax system and could make critical journeys less affordable for users who rely on these services the most.

The government maintains that the new VAT rules will help large private hire operators “play by the same rules” while protecting smaller local firms, reflecting a broader intention to foster a fair and sustainable market environment. Public consultation on the proposals is expected to proceed in the coming months.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.