What’s going on with VAT on Uber rides?
Passengers on Uber and other platforms face higher prices after a legal battle which may force rideshare apps to charge VAT on fares. So what’s happened, and why?
We’ve put together a breakdown for private hire drivers on why VAT on fares is being talked about now, and how Uber’s Supreme Court case on workers’ rights is still having an effect.
We also look at when changes to fares might come in, and what the apps have to say about it.
This information is correct at the time of writing on 22 February 2022.
VAT changes: At a glance
- Uber and Bolt riders in London face a 20% rise in fares due to new VAT charges.
- Transport for London is putting pressure on Uber and Bolt to charge VAT following a recent court case.
- Extra costs are likely to be charged to riders.
- The charge is set to apply in London at first, but could be introduced across the country in future.
This all starts with Uber’s Supreme Court case last year.
In February 2021, the Supreme Court found that Uber drivers should be classed as workers rather than self-employed. It means drivers should be given certain rights, such as minimum wage, holiday pay and pensions.
The court also ruled that Uber, Free Now, Bolt and all rideshare apps have contracts with passengers, meaning the companies are responsible if something goes wrong.
The decision means rideshare platforms are likely to have to pay VAT. They haven’t had to pay before because they weren’t classed as a transport company.
Transport for London (TfL) now wants to see Uber and others make changes to their business based on the court decision.
When could the VAT charge come in?
TfL is in talks about requiring VAT charges in the next few weeks. More details to be shared as soon as they become available.
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What do the apps say?
Uber has said it will comply with all its VAT obligations.
Bolt says: “We are currently discussing our future operating model with TfL, like many other operators, and will update once that process is complete.”
Free Now says: “Free Now has always been a responsible player from a tax perspective. We are registered in the UK for VAT purposes, contributing to the local economy. We will comply with the December High Court ruling and we will do our best to minimise impact on our customers.”
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