2024 IN THE TAXI INDUSTRY: The year of cross-border, VAT legal battles and increasing PHV numbers
The UK taxi industry in 2024 has been marked by significant legal disputes and policy discussions, particularly concerning cross-border operations and value-added tax (VAT) obligations. These developments have had profound implications for operators and drivers nationwide.
Cross-Border Hiring Debates Intensify
Cross-border hiring, where private hire vehicles (PHVs) licensed in one area operate in another, has been a contentious issue throughout the year. Local authorities and industry stakeholders have raised concerns about regulatory inconsistencies, enforcement challenges, and the impact on service standards. The Government has acknowledged these concerns and is considering options to improve the current regulatory position in 2025.
VAT Liability and Legal Challenges
A pivotal moment occurred in July when the UK’s Court of Appeal overturned a previous High Court ruling that had mandated private-hire operators outside London to charge 20% VAT on their services. This decision stemmed from Uber’s legal pursuit to standardise VAT obligations across the country, following a 2021 Supreme Court judgment that classified its drivers as workers, thereby altering its tax responsibilities. The appeal, successfully brought by Delta Taxis and Veezu, was seen as a victory for regional operators, alleviating the immediate financial burden of VAT charges on their services. However, Uber expressed concerns about the resulting inconsistencies in operator requirements between London and other regions, indicating potential future legal challenges.
Driver Shortages and Recruitment Initiatives
The industry experienced the continuation of a decline in the number of new black cab drivers. In response, companies like FREENOW implemented initiatives such as the Knowledge Subsidy to encourage more individuals to pursue careers as black cab drivers. To date, over 700 drivers have been approved to join the programme, with 115 already enrolled in Knowledge schools. Additionally, the London Assembly urged the Mayor to introduce a Taxi Action Plan to safeguard the future of London’s iconic black cabs.
Technological Advancements and Competition
The rise of ride-hailing services continued to disrupt traditional taxi operations. Companies like Bolt expanded their presence, intensifying competition. In November 2024, Bolt lost a legal challenge in the UK Employment Tribunal over the employment status of its drivers, with the Tribunal ruling that Bolt’s drivers qualify as “workers” rather than self-employed independent contractors. This classification means that drivers are entitled to employment benefits, including minimum wage protections.
Environmental Regulations and Fleet Modernisation
Environmental concerns prompted stricter regulations, compelling taxi operators to transition to electric vehicles (EVs). The impending 2035 deadline for the ban on new petrol and diesel vehicles added pressure on the industry to adopt greener alternatives. Discussions within the industry highlighted the need for more government level support and infrastructure improvements to support this transition.
Congestion and Urban Mobility Challenges
Urban congestion remained a significant issue, affecting the efficiency of taxi services. In London, road closures and poorly coordinated roadworks caused widespread delays, with areas like Euston Road becoming emblematic of the problem. The Licensed Taxi Drivers’ Association (LTDA) highlighted these challenges, attributing them to mismanagement of road planning and calling for better coordination to alleviate gridlock.
Regulatory Disparities and Licensing Issues
The industry grappled with regulatory inconsistencies across regions. The Department for Transport’s 2024 report indicated a 10% year-on-year increase in driver licenses, reaching 381,100, with a substantial rise in private hire vehicle (PHV) drivers. However, taxi driver numbers declined by 7.4%, highlighting a shifting dynamic within the industry. The report also noted regional disparities, with the West Midlands, particularly Wolverhampton, becoming a licensing hub for drivers operating across England.
These developments have highlighted the complexities within the UK’s regulatory landscape for taxi services. The disparities between regional and national regulations have prompted calls for a more unified approach to licensing, taxation and funding.
As the year concludes, the industry anticipates discussions to continue and potential legislative actions to address these ongoing challenges. Stakeholders are advocating for clarity and consistency in regulations to ensure a level playing field and to maintain service quality for passengers across the UK.
In summary, 2024 has been an evolving year for the UK taxi industry, marked by significant legal rulings and policy debates. The outcomes of these developments will continue to shape the industry’s trajectory in the years to come.
