VAT PAYMENTS: Fresh HMRC review could see Uber prices rise again

Users of ride-hailing app Uber could be facing further price increases as HMRC launch review into how VAT is being collected on rides.

According to The Telegraph, the tax authorities are looking into whether Uber are currently underpaying VAT since changes were made to their business model last year.

After a lengthy legal battle, Britain’s highest Court handed victory to Uber drivers for workers’ rights back in February 2021, which included the right to earn the minimum wage and holiday pay.

The landmark gig-economy judgment put pressure on HMRC to clamp down on the private hire operator. Uber had historically passed VAT liability to individual drivers who they claimed were independent contractors, rather than workers.

In October 2022 an agreement was made between Uber and HMRC which saw the ride-hail giants pay £615million in outstanding VAT payments.

According to The Telegraph, Uber are only collecting VAT tax on the commission it takes from drivers rather than the cost of the whole journey. Drivers are charged 25% of the total fare.

Sources from the newspaper say HMRC are reviewing whether this complies with legislation. If Uber are forced to apply VAT on the whole booking, passengers could see the cost of their booking rise by a further 10%.