Bolt sends £200m warning to Reeves ahead of Uber VAT ruling
Ride-hailer Bolt has sent a stern warning to Rachel Reeves over government inaction on a possible 20 per cent VAT hike for taxi firms.
City PM understands the mobility firm has written to the Chancellor warning it has withheld £200m of investment in the UK over the last three years as ministers dither over the so-called “taxi tax.”
Cab, minicab and private hire operators have been left in limbo in recent years over a possible 20 per cent additional VAT charge on fares.
The hike stems from court rulings that concluded taxi firms rather than individual drivers are responsible for contracts with passengers.
Critics warn such a tax increase would result in higher fares for consumers and hit driver earnings, while Uber says it wants “consistency” across the system. The San Francisco-based ride-hailing giant was already forced to raise fees after a separate court ruled its operations in London could be viable for VAT.
It is seeking a fresh ruling on contracting arrangements at a Supreme Court hearing in July, which would impact whether VAT hits private-hire operators outside London.
In addition to the impact on investment, Bolt’s letter is understood to warn the looming Uber ruling could make private hire services more expensive and less accessible.
The Treasury launched a consultation into the problem last summer, but Bolt believes it has been allowed to drift since without a resolution.
Bolt argued in the letter the current system was a “postcode lottery,” where VAT is applied at varying rates depending on business models and geography.
Emily Dalton, head of UK operations at Bolt, said: “The continued uncertainty over VAT on private hire journeys is harming the UK’s economic growth – holding back vital investment and innovation in the UK.
“The private hire industry is a key part of the UK’s transport network, relied upon by millions of people every week. If the Government presses ahead with this ‘taxi tax’, it will drive up fares, reduce transport options, and hurt those who depend on these services the most.”
The Treasury was approached for comment.