PHV TAX: Private hire operators intensify campaign to gain 0% VAT status on rides with new public petition

Private hire operators are intensifying their campaign, 'Stop the Taxi Tax', to persuade Chancellor of the Exchequer, Jeremy Hunt, to back a 0% VAT status on private hire journeys.

Despite its name, this campaign is directed at private hire vehicle (PHV) operators, such as minicabs, ridehails, and chauffeurs, who offer pre-booked transportation, as opposed to traditional taxi drivers or Hackney Carriages.

The operators, including some of the nation's largest PHV companies, are pushing for this tax change in a bid to stay competitive and prevent passing on potential VAT costs to drivers current profit margins and passengers. The VAT in question could rise to as much as 20%, although a smaller marginal VAT rate is being pursued by ridehail giants like Uber and Bolt.

The fresh concerns around VAT payments follows a ruling in a recent Uber case, which necessitated 20% VAT on private hire fares, shifting the VAT responsibility from individual drivers to the operators.

The 'Stop the Taxi Tax’ campaign has launched a petition seeking public support. The number of signatories is currently unknown.

The petition, featured on 38Degrees, highlights the potential negative impact it could have on drivers, consumers requiring essential journeys, and businesses dependent on minicabs.

It urges the Government to intervene promptly, expressing concern that the upcoming consultation slated for early 2024 might delay resolution. The petitioners are advocating for the consultation's prompt release to facilitate decisive action in the Spring Statement in March, thereby mitigating further uncertainty and concern for those involved in the PHV industry.

Some media reports claim that taxi fares will need to rise. Despite pictures of iconic black cab circulating next to the headlines, hackney carriage drivers and the tariffs they use, will not be affected.

It remains that VAT cannot be applied to a metered fare and taxi drivers turning over less than £85,000 will not be liable to pay VAT. A change to this position is not being pursued by the taxi industry.