UK Finance Bill would make large PHV operators account for VAT on full fares

Clause 50 would create a deemed supply

Where passenger transport by taxi or private-hire vehicle is supplied through an agent acting in its own name, clause 50 would amend section 47 of the Value Added Tax Act 1994 so that the service is treated as supplied both to and by the agent. The Treasury could prescribe cases where the rule does not apply, including by reference to the agent’s turnover. The Bill is a proposal and does not itself make the new treatment operative.^[1][2]

The start date and threshold remain subject to implementation

HMRC’s policy note and the Budget legislation overview state an intended start date of 2 January 2028. The Government identifies £50 million of annual fare turnover as its lead threshold option, but says it will consult before settling the threshold and final design. Clause 50 leaves commencement to Treasury regulations, so neither the intended date nor the detailed scope should be treated as final enacted law.^[1][3][4]

The measure targets the operator’s VAT position

If enacted in the proposed form, a VAT-registered operator within scope would account for output VAT on the full passenger fare rather than only on a separate agency charge. HMRC says the change is intended to address differences between principal and agency models, particularly outside London. The operator’s deemed supply must still be distinguished from the driver’s employment or tax status and from any separate commission or platform service.^[1][3]

Operators should map arrangements, not apply the rule early

Taxi and private-hire operators and platforms should identify arrangements in which an agent contracts in its own name, map the full fare and related invoicing and VAT-return flows, and assess systems changes for a possible 2028 start. The rule would not automatically cover every platform or operator, and smaller businesses below the eventual threshold are expected to remain outside it. Reassess after consultation, material Bill amendments, Royal Assent and the implementing regulations.^[1][3][4]