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‘Taxi tax’ will be final nail in the coffin, say PHV drivers

PHV drivers are calling on Chancellor Jeremy Hunt to stop the ‘taxi tax’ in his Budget on Wednesday, amid fears a 20% fares hike will hit drivers and passengers “like a train”.

Fares could rise after a High Court ruling last year that taxi companies were liable for VAT – not drivers. Now, HMRC wants 20% VAT levied on the full fare of all PHV rides – which would raise prices for passengers across the country.

The Independent explains that under current rules, PHV bases do not pay the tax because “drivers are classed as independent, self-employed contractors who do not meet the required earnings threshold of £85,000 per year”.


If the increase goes ahead, there are fears it could lead to job losses and affect the most vulnerable.

Telford private hire driver Saf Khan, 43, told the Daily Express the new tax was a “no-win situation from every angle” for drivers and customers.

“As a driver, it’s going to be very detrimental because as we know people are struggling as it is already. To whack another 20% on the fares is going to hit the customers like a train.

“I think the number of customers is going to go down and possibly the number of drivers will go down as well. Drivers are struggling as it is. If the fares are going to go up it’s going to be deterring customers from booking taxis, it’s going to increase our hours further, just to make ends meet.”


Among those worst hit by any increase, Mr Khan said public transport in some areas is so bad that he and colleagues are picking up passengers at bus stops, who have been let down by local services.

“This 20% could be the nail in the coffin. For them to introduce this tax at this moment could spell the end. It will deter a lot of taxi drivers away, it will deter customers away.

“We are the heart of the community, we are a very important part, especially in the areas like Telford where the public transport is not good at all.

“Our bills already sky high, my message to the Chancellor would be to think this through from a driver’s perspective as well as a passenger’s perspective.”


Mr Khan’s concerns have been echoed by the Stop the Taxi Tax campaign group.

Spokesman Gareth Cadwallader told the Daily Express: “The taxi tax will leave a transport black hole in rural communities. Private hire vehicles and minicabs provide an essential service in rural communities and fill the gap left by the lack of public transport.

“The taxi tax hammers the only transport option people can rely on and will seriously harm some of the poorest and most isolated communities in Britain.

“Many elderly and vulnerable passengers I drive rely on my service to get to hospital, their GP and the supermarket and have no viable alternative.

“We need the Prime Minister and Chancellor to step up for these communities and take urgent action.”

While PHV drivers want assurances in the Budget this week, a Treasury spokesperson told the Independent: “The High Court ruling does not change the tax position, it remains the case that fares are liable to VAT at the standard rate.

“However, we are considering carefully the implications of the High Court ruling including the challenges it raises, and we aim to publish a consultation shortly.”

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