Private-hire taxi operators outside London have won a significant legal battle after the UK Supreme Court held that they do not have to pay 20% VAT on their fares. The unanimous ruling, handed down on Tuesday, rejected Uber’s appeal in a three-year case that threatened to significantly push up operating costs and fares nationwide.
The legal battle was over whether private-hire companies enter into agreements directly with passengers. Uber had contended that they do, and as a result, such operators would be responsible for collecting and remitting VAT at 20% on every fare. Although the High Court in London had supported Uber’s argument in 2023, that ruling was eventually overturned by the Court of Appeal after being challenged by UK-based operators Delta Taxis and Veezu.
In its ultimate judgment, the Supreme Court upheld the Court of Appeal’s ruling, confirming that private-hire operators outside of London are not bound by contract to passengers as Uber had insisted. They are therefore not automatically liable for VAT on the entirety of the fare.
Nia Cooper, the Veezu Chief Legal Officer, described the decision as a “victory for the UK private-hire industry.” The decision lets companies control their business models and protects passengers from the fare increases that would have ensued if the tax burden were placed on them. Cooper added that the ruling relieves the regulatory pressure on local licensing authorities.
“British-owned firms can hold their ground against international giants attempting to reshape the market through the courts,” she said.
Uber reacted to the ruling by highlighting that the ruling has no impact on how VAT is treated for its own services. In a statement, a spokesperson said, “The Supreme Court decision reaffirms that there are different rules for London booked trips versus the rest of England and Wales. It does not alter Uber’s VAT obligations, which have been maintained in other cases.”
Meanwhile, a second ride-hailing service, Bolt, secured a different ruling recently, with the court concluding that the firm is responsible for VAT only on its commission, rather than the entire cost of a trip. HMRC, however, has been given leave to appeal that ruling.
Collectively, the decisions represent a turning point in the way VAT is treated across the UK’s ride-hailing sector.
