James Murray answered Richard Holden on 10 November 2026 without a figure for passenger fares or the number of private hire drivers. Holden, the Conservative MP for Basildon and Billericay, asked what assessment the Chancellor had made of the VAT changes for larger private hire operators from January 2028.
The answer to written question 40172, tabled on 3 November, covers passenger fares and the number of private hire drivers. Holden had tabled written question 39709 on 2 November, asking about passenger fares and drivers' earnings. Both replies use the same words.
At Budget 2026 the government announced that larger operators, with annual fare turnover above a threshold still to be set, will be liable for 20% VAT on the full value of their fares from 2 January 2028. A consultation to confirm that threshold is due shortly.
"The measure itself does not place any new VAT obligations on drivers nor does it change existing employment or worker status protections. Decisions about fares, commission rates and commercial arrangements are matters for individual businesses."
The tax note
On 29 October 2026 the government published VAT treatment of private hire vehicle operators. £50 million of annual fare turnover is the lead option for the threshold. Businesses below that level would not be affected. The consultation is also meant to support the final design and implementation.
In London a private hire operator must act as the principal, the person who supplies the journey to the passenger. Outside London the operator may act as the driver's agent, and a VAT-registered driver accounts for VAT on the full fare. The note records that this split has left larger operators competing on unequal terms. From 2 January 2028, where the operator is above the threshold, a journey supplied through an agent will be treated as made by the operator, who accounts for VAT on the full fare when registered.
The same note sets out an Exchequer yield, certified by the Office for Budget Responsibility, in Table 6.1 of Budget 2026. The yield is £95 million in 2027 to 2028, £385 million in 2028 to 2029, £395 million in 2029 to 2030, £410 million in 2030 to 2031 and £425 million in 2031 to 2032. Those figures are the tax yield. They are not an estimate of fares or of driver numbers. Passengers could be affected if operators respond by changing fares. Some private hire drivers may choose to register for VAT, but the measure is unlikely to require more businesses to register.