UK closes VAT loophole, giving black cab drivers a level playing field
Black cab drivers in London have received a significant boost after the UK government ended a tax loophole that allowed large app-based minicab firms to pay much less VAT. The new measure ensures private hire operators can no longer use a specialist tour operator tax scheme to undercut traditional cabbies. Industry representatives and government officials say the move will promote fairness and support public services. The reform is expected to raise around £700 million a year for public priorities.
What we know
- The UK government has barred private hire vehicle operators in London from using the Tour Operators Margin Scheme, a VAT arrangement meant for holiday businesses.
- Previously, large minicab firms paid as little as 4% VAT, while black cab drivers and small firms paid the full 20%.
- Rachel Reeves, Chancellor of the Exchequer, said the change will help protect cabbies and fund public services.
- Steve McNamara, General Secretary of the Licensed Taxi Drivers Association, welcomed the move as a step toward fairness.
- Smaller operators outside London and all black cab services are not affected by the reform.
