13th January 2026 - Update
The situation regarding VAT on fares in London and nationally remains unclear. The LPHCA will again chase HMRC for clarification following two non-responses to our requests for clarity and a meeting. Many questions for London operators and drivers remain unanswered, as does the longer-term impact outside the capital.
The Tour Operators' Margin Scheme (TOMS) in most cases can no longer be used from 1st January 2026.
We are regularly in touch with our commercial partner Eazitax on this matter, and as soon as we receive clarity we will advise members.
2nd December 2025
The situation regarding whether VAT should be applied to private hire fares has, in part, now been clarified with the removal of the so-called Tour Operators' Margin Scheme (TOMS). Furthermore, clarification has been given to the so-called platform operators, some of whom were allegedly utilising questionable VAT accounting protocols.
The LPHCA submission to the HMRC consultancy was bizarrely responded to on budget day. Given recent court cases, most of the Chancellor's proposals were as we had envisaged would happen. However, the situation in London remains extremely unclear.
As well as making a considerable submission to HMRC, which is now available on the LPHCA website Members ONLY Area, we undertook considerable dialogue with HMRC regarding our views on operators being the principle for bookings, and drivers not needing to add VAT to fares for legal and regulatory reasons.
Whether VAT will be mandated to be on fares paid directly to the driver is, in our view, very questionable, and therefore open to challenge.
The LPHCA will therefore urgently seek another meeting with HMRC, alongside our expert industry accountancy advisor Gary Jacobs, for clarification.
Our view remains that fares paid directly to drivers by passengers in London should not be subject to VAT.
More information will follow after our dialogue with HMRC; this will be put in the LPHCA Members ONLY Area.