Taxi and private hire firms back open letter on ‘taxi tax’ ahead of budget

A coalition of 59 taxi and private hire vehicle (PHV) operators has issued a warning to Chancellor Rachel Reeves, urging her to rule out a proposed 20% VAT levy on PHV fares—dubbed the “Taxi Tax”—ahead of the Autumn Budget.

Widely reported, the open letter, spearheaded by Cardiff-based Veezu, argues that applying VAT to all PHV journeys would increase costs for millions of passengers, reduce driver numbers, and threaten the viability of hundreds of small and medium-sized operators.

Veezu reports that over 50% of its journeys are for essential purposes such as healthcare, commuting, and education, with only 12% linked to leisure travel.

Nathan Bowles, CEO of Veezu, stated:

“PHVs keep Britain moving, connecting communities that rely on us for essential journeys, and a 20% VAT hike would hit the elderly, disabled, and rural passengers hardest. Businesses cannot plan, invest or grow while uncertainty remains”.

Operators warn that the proposed tax would disproportionately affect rural areas and regions with limited public transport, including Wales, the South West, and the East of England.

A recent survey by The Taxi Insurer found that 70% of the public would reduce or stop using PHVs if VAT were added to fares, with potential knock-on effects for the night-time economy, healthcare access, and school transport.

The letter follows the July 2025 Supreme Court ruling in Delta and Veezu v Uber, which clarified that PHV operators regulated under the 1976 Miscellaneous Provisions Act may operate under various business models. While this provided legal certainty, operators fear the VAT proposal could undermine that progress.

Despite a consultation on VAT treatment of PHVs closing in August 2024, the Treasury has yet to publish its response. 

Industry leaders are calling for urgent clarity and a fair, sustainable solution that protects essential transport services and avoids penalising working families and vulnerable passengers.