London's black cab drivers have launched a fresh offensive against Uber, demanding the Chancellor close a tax loophole they claim gives the ride-hailing giant an unfair advantage and costs the Treasury millions.
Cabbies Call for Tax Fairness
In a joint letter sent to Chancellor Rachel Reeves, the Licensed Taxi Drivers’ Association and the London & Eastern Cab Section have called for an end to what they describe as an unjust tax discrepancy. They argue that Uber exploits the Tour Operators Margin Scheme (TOMS), a system designed for travel companies that allows them to pay an effective VAT rate of just five percent.
This stands in stark contrast to black cab drivers, who are required to pay the full 20 percent VAT rate on their services. The associations have accused Uber of misleading the Treasury and the public through extensive lobbying about the benefits of its business model.
The Billion-Pound Budget Question
The cabbies' campaign is not just about levelling the playing field; it's also about potential revenue. The Licensed Taxi Drivers’ Association has argued that closing this loophole could generate an extra £1bn for the Exchequer in the upcoming Budget.
However, Uber and its competitor Bolt have mounted a fierce defence. Their bosses have also written to the Chancellor, warning that applying the full VAT rate would cause fares to rise "dramatically". They contend that such a tax move would "hit the most vulnerable people in society hardest" and reduce footfall across the UK's high streets.
A Long-Running Battle Escalates
This tax dispute is the latest episode in a long-standing conflict between traditional cabbies and private hire vehicle operators. Steve McNamara of the Licensed Taxi Drivers’ Association told City AM that Uber has been running a "scare campaign" in the weeks leading up to the Budget announcement.
"Drivers simply pay the tax that HMRC tells them is owed," McNamara stated. "Uber for whatever reason have decided they’re above that."
The war over the loophole coincides with expected Budget measures responding to a government consultation on applying VAT to all private hire vehicle journeys. This battle also extends to the courts, where the High Court is still reviewing a claim from black cabbies for £340m in damages over alleged wrongdoing by Uber between 2012 and 2018.
Both the Treasury and Uber declined to comment on the ongoing dispute.
