Uber has swerved paying millions of pounds to the UK exchequer under Rachel Reeves’s new “taxi tax” after the ride-hailing app rewrote contracts with its drivers.
The move came as rules announced in November’s budget took effect, which adjusted how VAT is payable on minicab fares and would have resulted in the whole Uber fare becoming subject to the 20% sales tax.
In November, Reeves told the Commons the changes would end up “protecting around £700m of tax revenue each year”.
However, updated terms issued to Uber drivers from January 2026 mean the technology firm will act as an agent, rather than as the supplier, of transport services outside London. The move means drivers make a contract directly with their passengers – so they must charge any VAT due on the fare, while Uber only adds VAT to its commission.
Garbage Company.
Do you just voluntarily give the government money that you aren’t legally required to pay?
This isn’t the same.
They were legally required to charge VAT on the whole fare but they found a loophole which passes the commitment onto their drivers.
It requires a unilateral change to every driver’s contract which is a serious abuse of the power difference in the employer/ employee relationship. This is only allowed due to another legal loophole which enables them to dodge employer commitments by claiming that they aren’t employees.
I suppose I don’t give “loophole” the same moral weight that you do. Even if this was not intended to be legal, if the law as written permits it then the blame is on the government for passing a law other than the one intended to pass, not on Uber for taking action in accordance with the law.
(Moral obligations can exist without being legally required, but taxes are a legal construct and there is no such moral obligation to pay them which extends beyond the legal one.)
Tell me more about how taxes are bad and corporations deserve the right to avoid paying them while benefiting from the countries they operate in.
I’m not saying that taxes are bad. I’m saying that if the government says “there’s a new tax you have to pay if you do that” and you say “ok, then I won’t do that,” you have done nothing wrong. You have a duty to obey the law, but no duty to maximize government revenue.
Oh yeah, totally not wrong to change the legal definitions of your contracts the day new legislation comes out designed to claw back the taxes you have been avoiding the whole time without that new legislation.
Can you please take your corporate ski poling else where?
Seriously, us regular folk can’t just reclassify ourselves and dodge taxes (not that we should if we could). We can’t suddenly call our house a contracted asset and avoid taxes or something.
Companies shouldn’t be able to either.
You can! In the US, just declare all of it as a self-employed home office and then it’s a business expense!
Note that like Uber’s actions here, it’s considered tax evasion and illegal.
Agreed.
Honestly it this point I think a full scale tax strike would send the message.
We the people of [Insert country] refuse to pay a [lowest currency of country] in taxes until every single person and corporation (Which are legally declared people in most countries, in case you didn’t know) pays their fair share and the entire fund goes to supporting our basic needs and infrastructure as a society.
Everyone should have Shelter, Food, Water, Medical Care, Security, and Education fully covered for simply existing in society, and this would be a good step one.
How are Uber drivers going to collect VAT on fares? I though Uber determined the price of a ride. Is it different in the UK?
I think it means that sales tax just came to the UK? Where what’s quoted on the tin isn’t the price at the register? If true, it’s going to make a lot of people very angry.
The move means drivers make a contract directly with their passengers – so they must charge any VAT due on the fare, while Uber only adds VAT to its commission.
That doesn’t answer my question, I don’t think at least. Where in Uber->Driver->Rider is this VAT that drivers are supposed to collect going to be added into the fare if Uber is only adding VAT for for its commission?
Won’t drivers only need to collect VAT if they are VAT registered, which means taking more than some number of thousands of pounds? At which point, presumably they tick a box in the uber driver app and it makes them 20% more expensive.
The article says £90k or more requires VAT registration and that most drivers are not earning that much. Even so I would still like to know how, theoretically, this VAT is to be charged and collected in the current app.
