Government expands tax conditionality to more licensing regimes

The UK Government has confirmed that tax conditionality requirements will be extended to cover additional licensing regimes, following a consultation on tackling the hidden economy. The consultation sought views on whether linking tax compliance to licensing would help ensure fairness, reduce hidden economic activity, and protect legitimate businesses.

In its response, the government announced that tax checks will now apply to waste licences, animal welfare licences—including animal breeding, boarding and pet selling—taxi and private hire vehicle licences, and pedicab licences in London. This builds on measures introduced in April 2022, when taxi and private hire drivers became subject to tax checks before being granted or renewing a licence.

The government emphasised that these sectors were chosen because they present higher risks of hidden economic activity and because licensing provides a practical enforcement mechanism. Applicants will need to demonstrate tax compliance before being granted or renewing a licence, strengthening deterrence against tax evasion and ensuring fairness across industries.

The Institute of Licensing, in its consultation response, welcomed efforts to tackle the hidden economy but stressed the importance of proportionality and clarity. It highlighted that licensing authorities and applicants will need clear guidance to manage the additional responsibilities without creating unnecessary burdens.

By expanding tax conditionality to these new sectors, the government aims to reinforce compliance, protect legitimate operators, and build public confidence in licensing systems.