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.
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.
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.
So rather than Uber being above the £90k limit collectively. They’re basically allowing each driver to be a contractor who had their own £90k entitlement? Bloody hell that’s not a loophole, that’s a channel tunnel!