London taxi fares are set to rise after the government moved to close a long-standing VAT loophole used by ride-hailing platforms, a decision expected to raise around £700 million a year for the Exchequer.
The change, announced by Chancellor Rachel Reeves in November’s Budget, will hit companies such as Uber and Bolt, which have previously used a tax scheme intended for tour operators to reduce their VAT bills.
Ministers argue the move will level the playing field for London’s black cab drivers, while Uber has warned it will result in higher prices for passengers in the capital.
At the centre of the dispute is the tour operators’ margin scheme, which allows eligible businesses to pay VAT only on their profit margin rather than the full value of a service. Originally designed for holiday and coach tour companies, the scheme has also been used by ride-hailing platforms.
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