Welsh taxi company joins call to scrap ‘Taxi Tax’ plan

A taxi company founded in Wales has joined 58 private hire operators from across the UK in calling on Chancellor Rachel Reeves to confirm that journeys will not be subject to a 20% VAT rate.

Veezu, the UK’s largest private hire technology business originally founded in Newport, have also requested the Chancellor meet with the sector to agree on a fair and sustainable solution ahead of the Autumn Budget.

The measure, referred to across the industry as the “Taxi Tax”, is expected to be addressed on 26 November.

Operators warn that applying a blanket VAT rate of at least 20% on all PHV fares would increase costs for millions of passengers, reduce the number of driver-partners in the sector, and threaten the future of hundreds of small and medium-sized British-founded operators across the UK.

The letter from the operators also cautions that the proposal could damage local economies, particularly the night-time economy, which depends on affordable and accessible transport.

The “Taxi Tax” will hit working families and residents outside major cities, particularly in Wales, the South West and the East of England, which have far fewer accessible transport options.

Within Veezu’s own network, more than 50% of journeys are for essential purposes such as healthcare, commuting and education, while only 12% are for leisure. Any increase in fares would disproportionately impact households that rely on PHVs for everyday mobility.

The Treasury’s consultation on VAT closed in August 2024, but no response has yet been published. This prolonged uncertainty actively discourages investment across a sector that plays a vital role in keeping Britain moving, providing millions of safe, reliable and affordable journeys every day, and supporting 265,000 licensed private hire drivers.

The letter follows the Supreme Court’s unanimous ruling in Delta and Veezu v Uber, delivered on 29 July 2025, which confirmed that Private Hire Operators regulated under the 1976 Miscellaneous Provisions Act may lawfully operate under different business models, including as agents, principals or intermediaries.

While the landmark judgment provided long-overdue legal clarity for the sector, the proposed introduction of VAT on fares now risks undoing that progress, and uncertainty across the sector continues to be amplified by ongoing concerns about what the Government’s decision will be.

Providing clarity now would support fair competition, economic growth, and the Government’s pledge to support the UK’s transport sector – protecting passengers, self-employed driver-partners and British businesses alike.

Nathan Bowles, CEO of Veezu, stated: “PHVs keep Britain moving, connecting communities that rely on us for essential journeys, and a 20% VAT hike would hit the elderly, disabled, and rural passengers hardest.

“The open letter is a united call from operators across the UK urging the Government to confirm that PHVs will not be subject to a 20% VAT rate. Businesses cannot plan, invest or grow while uncertainty remains, and every month without reassurance contributes to the slow erosion of one of Britain’s most essential transport services.

“A clear, consistent policy would protect passengers and licensed drivers from rising costs, back British businesses, and restore confidence in a sector millions depend on for everyday travel and essential journeys.”

Veezu was founded in Newport in 2013, operating as an on-demand mobility service that supports hyper-local communities.

Commenting, Welsh Conservative Shadow Cabinet Secretary for Transport and Infrastructure, Sam Rowlands MS, said: “These plans will have a massive impact on local communities and deal a serious blow to small and medium-sized taxi companies, while also decimating the night-time economy.

 “This so-called ‘Taxi Tax’ would punish everyday people who rely on private hire vehicles for essential journeys and put thousands of jobs at risk.

 “The Government must provide clear assurances that Welsh families and businesses will not be hit by this unfair tax, in order to protect essential services, support local economies, and safeguard jobs in the private hire sector.”