VEEZU: VAT TREATMENT OF PHVs A VAT VICTORY FOR THE INDUSTRY
Article by Nia Cooper Chief Legal Officer
Veezu
www.veezu.co.uk
It is refreshing to be able to share good news. In last week’s Budget the Chancellor confirmed two things that should be celebrated by the private hire sector. There will be no 20% VAT imposed on fares outside of London; and the Tour Operators Margin Scheme (TOMS) will be prohibited for use in the PHV sector from 2nd January 2026.
These announcements provide clarity, something we have lacked for over three years, and create a fairer footing across the sector’s different markets. Veezu has been closely involved throughout, championing the industry’s interests and pushing for a consistent and workable outcome.
Firstly, in partnership with Delta taxis, we fought toe- to-toe with Uber all the way to the Supreme Court to ensure that they could not use litigation to shape the sector in their own image. When the Supreme Court returned a unanimous and clear decision that different operating models are legal outside of London, it helped frame the policy decision for the government.
Secondly, we led a campaign to ensure the government understood the impact of imposing 20% VAT on the sector outside of London. This focused on showing how higher fares would negatively affect passengers, self-employed driver partners, local communities and local PHOs. Key to this was demonstrating that the reasons people use PHV services vary greatly across the country.
A level playing field
Calls for a level playing field have echoed throughout the Uber v Sefton litigation and the VAT lobbying campaign, but the phrase is often used in a way that distracts from the real issue. The government’s consultation on the VAT treatment of PHV fares made this clear. It revealed a significant misunderstanding of how the PHV market in London differs from the markets across the rest of England and Wales. Many of the assumptions about journey patterns and the
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impact of higher fares were shaped by the London experience, not the realities elsewhere. The consultation process gave the sector, and the passengers who rely on our services, the opportunity to present evidence showing how and why PHV use varies across the country, and this evidence was welcomed by government.
London and the rest of the country operate in fundamentally different transport environments. In the capital, individuals have access to a dense network of Underground services, buses, light rail, overground trains and rental bikes, with taxis and PHV acting as an additional choice, often for leisure.
Journey profiles in the PHV sector outside London are dramatically different. Over 50% are for essential trips, such as regular hospital appointments, collecting the weekly shopping and commuting to work. The government’s own data shows that communities outside London are poorly served by public transport. The Transport Connectivity Metric, which measures how easily people can reach work, hospitals, schools and shops within an hour, highlights the scale of the gap. London scores 84 out of 100, while Wales sits at 53 and the South West and East of England are not much higher. As a result, people outside the capital are 40% to 60% less connected, and in many of these areas private hire is the only practical way to travel.
Taken together, these realities show why a single notion of a ‘level playing field’ cannot sensibly be applied to two markets that serve different needs, operate under different rules and exist in funda- mentally different transport environments. A one size fits all model would not improve fairness. It would simply disadvantage the communities that depend most on PHV services.
The future
The future is uncertain, but one thing is clear, Uber will not quietly accept the government’s decision and will continue lobbying to shape the industry in its own image. Our successes at the Supreme Court and in the Budget were only possible because the sector remained united and focused. We cannot afford to let these hard-won gains slip.
As I have said before, the battle is won, but the war goes on.
DECEMBER 2025 PHTM
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