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black taxi driver They hailed it as a “landmark step” after the government imposed higher taxes on online minicab companies.
The tour operator deposit scheme was designed to significantly reduce the VAT paid by tour operators and holiday coach trips, but it has been abused by online minicab companies.
The Treasury said the companies “illegally used niche schemes to avoid taxes”.
Chancellor of the Exchequer Rachel Reeves “We are stopping the illegal use of niche tax schemes to protect everyday taxi drivers,” it said in a statement.
The scheme allows tourism and holiday businesses to pay VAT only on the profits they make on package tours.
The government says this will generally reduce the effective VAT rate to 4%.
Steve McNamara, general secretary of the Licensed Taxi Drivers Association, which represents black cab drivers, said: “For too long, drivers and small operators paying 20 per cent VAT have had to compete with online small taxi companies that benefit from niche tax schemes.”
He added: “The government’s decision to introduce VAT on all private hire journeys is a landmark step for fairness and integrity in our industry.”
Uber UK general manager Andrew Brahm said the change would mean higher prices for passengers in London.
He said: “The government’s action to change the rules today will mean higher prices for passengers in London, less work for drivers and people already struggling with the cost of living.”
“The court has twice ruled that tour operator bond schemes apply to operators such as Uber. This ruling also creates the absurd situation that travel in London will be taxed at a different rate to travel elsewhere in the UK.”
The reforms are expected to bring in £700m a year and the new measures were first announced by the Chancellor in the Budget.