Uber drivers plot exodus as platform swerves ‘taxi tax’
Uber is staring down the barrel of a potential driver exodus as members of its fleet threaten to jump ship to rival apps or return to black cabs, following a new year contractual overhaul designed to swerve a huge VAT bill.
Documents seen by City PM show a wave of fury in private messaging groups, with drivers urging colleagues to reject new terms that they claim turn them into “tax collectors” for the platform.
This follows the removal of the Tour Operators’ Margin Scheme (TOMS), which came into effect on 2 January.
TOMS is a niche tax break the Treasury previously estimated would net £700m a year for the public purse if closed.
Messages seen by City PM have revealed that drivers are increasingly looking at rival platforms or local minicab firms, with many calling for a “mass log off”, and protests outside parliament to contest the change.
‘No changes’ will be made for drivers
But Uber remains bullish and maintains that the transition is a necessary alignment with the rest of the UK market.
The market leading company confirmed today that it is not seeing any disruption to services and that the update simply moves its regional operations to an ‘agent’ business model.
This is the standard practice for almost all private hire operators outside of London.
By repositioning itself as a booking agent rather than a principal transport provider, Uber ensures that VAT only applies to its own service fee rather than the full fare.
And as most drivers earn below the £90,000 VAT registration threshold, this move keeps prices competitive for passengers, by avoiding a 20 per cent price hike.
Uber insists that the change is a direct response to government policy aimed at keeping essential everyday transport affordable.
Addressing concerns over take-home pay, Uber clarified that the new terms do not change the portion of the fare the platform keeps.
It also insisted that they have not introduced variable commission as a result of the model change.
Screenshots seen by City PM showing varying service fees are, according to Uber, part of its dynamic marketplace practice designed to balance supply and demand.
The ride-hailing firm notes that its service fee can drop as low as three per cent on some fares to attract passengers during poor weather or off-peak hours.
This increases the total number of earning opportunities for those on the app.
Keeping its drivers
Uber is leaning heavily on its status as the only major player in the sector to designate all UK drivers as ‘workers’.
This classification, held through an agreement with the GMB Union, guarantees a suite of benefits that traditional self-employed drivers lack.
This includes a guaranteed national living wage, holiday pay based on 12.07 per cent of earnings paid out weekly in cash, and a pension plan with contributions from Uber.
The firm also highlighted that drivers have access to free sickness and injury protection, parental payments, and free university courses.
An Uber spokesperson said the vast majority of total fares go directly into drivers’ pockets and that the company is proud that thousands of drivers continue to make the positive choice to work on the platform as passenger demand continues to grow.
“All drivers receive a weekly summary of their earnings, which shows exactly what Uber and the driver received from trips”, they told City PM.
“We are proud that thousands of drivers continue to make the positive choice to work on Uber as passenger demand and trips continue to grow.”