In a landmark decision that marks a major setback for ride-hailing giant Uber, the UK Supreme Court has ruled that private-hire taxi firms outside London will not be required to pay 20 per cent VAT on their fares — a victory celebrated by smaller operators as a triumph for independent businesses.
The unanimous decision, handed down on Tuesday, dismissed Uber’s appeal to impose VAT liability on rival minicab firms across England and Wales. The ruling confirms that private-hire operators are not automatically considered to have a direct contractual relationship with passengers, meaning they can continue using an “agency model” that avoids VAT obligations.
The case originated from Uber’s 2021 defeat in the Supreme Court, which found its London drivers to be workers, triggering changes to how it conducted its business in the capital — including VAT obligations under the “principal model.” Uber had since sought to apply the same model nationally, hoping to level the regulatory playing field.
However, the effort was challenged by Delta Taxis, a Liverpool-based firm with over 2,000 drivers, and supported by Cardiff operator Veezu and Uber rival Bolt. They argued that Uber’s push for VAT compliance would lead to a 20 per cent fare hike and jeopardise the future of smaller, family-run operators.
Speaking on behalf of Delta Taxis, Director and Company Secretary Paul McLaughlin explained “We were never under any illusions as to the mountain we’d have to climb when Uber set about trying to destroy the agency model Delta has so successfully administered here on Merseyside from as far back as 1968. It’s one thing taking on a Local Authority, as small operators might be expected to do from time to time, but quite something else to be facing off against a multibillion-dollar global competitor like Uber.”
“We placed our fate, and that of the wider industry, entirely in the hands of Layla Barke-Jones from Aaron & Partners, who in turn secured the exceptional services of licensing heavyweight Philip Kolvin KC. They engaged tirelessly with Delta Taxis to construct a clear and robust defence against what many will see as a cynical, heavy-handed attack by Uber against smaller, independent family-run businesses like ours. We can only hope that our David and Goliath gamble has paid off.”
Despite the defeat, Uber stated it will continue to apply VAT to fares nationwide, maintaining its policy established after the 2021 London ruling.
The decision arrives just as Uber prepares to launch self-driving taxis in London by spring 2026, following the UK Government’s move to fast-track trials for autonomous commercial transport services.
With this ruling, the UK’s private-hire sector faces a clearer regulatory future — one that, for now, favours the survival and growth of smaller, independent taxi firms outside the capital.