It was announced as part of the Autumn Budget 2026 measures that the government will introduce changes to the VAT treatment of passenger transport services supplied through taxi and private hire vehicle (PHV) operators. The changes will take effect from 2 January 2028.

Under the new rules, qualifying private hire vehicle operators will be treated as making the supply of transport services to passengers, rather than acting as agents for individual drivers. This means that operators will have to account for VAT on the full value of the fare, rather than just any commission or fees they charge.

The changes aim to create a more consistent VAT treatment across the private hire industry. In London, private hire vehicle operators are already required to act as principals and account for VAT on the full fare. However, outside London, private hire vehicle operators can act as agents, with drivers responsible for accounting for VAT on fares where they are VAT registered. The new rules will help create a more level playing field between larger operators.

The measure will apply only to larger businesses whose annual fare turnover exceeds a specified threshold. The government will consult on the threshold, with a £50 million annual fare turnover currently the lead option. Smaller operators will therefore be unaffected.