UK Private Hire VAT Rules: Uber and Bolt Cases Explained

The UK’s private hire VAT rules have become a legal battleground. Disputes between HMRC and the ride-hailing platforms Uber and Bolt raise three questions: how these services should be classified for tax purposes, who must account for VAT, and whether platforms can use the Tour Operators’ Margin Scheme (TOMS) instead of standard VAT accounting. The outcomes could affect other platforms with similar models, such as Lyft and Gett.

The UK VAT Rules for Private Hire Services

From January 2, 2026, new UK VAT rules change how PHV operators, including ride-hailing platforms, account for VAT on passenger transport services. The main change is the removal of PHV and taxi operators from the TOMS, which previously allowed eligible businesses to calculate VAT on their profit margin rather than the full fare.

Under the new rules, VAT-registered operators acting as principals must generally charge 20% VAT on the full fare paid by passengers. This means VAT is calculated on the entire transport service price, rather than only the operator’s margin, potentially increasing VAT liabilities for large ride-hailing platforms. Notably, the impact depends on the operator’s business model. 

Operators acting as principals contract directly with passengers and are responsible for providing the transport service for VAT purposes. In London, private hire operators must operate under this model. Outside London, some smaller operators may act as agents, connecting passengers with self-employed drivers. In such cases, the operator generally accounts for VAT on its commission or booking fee, provided the agency arrangement reflects the actual contractual and commercial relationship.

Operators must ensure their contracts, invoicing procedures and day-to-day operations are consistent with their declared business model. VAT registration is generally required once taxable turnover exceeds the UK’s GBP 90,000 threshold, although other factors may also affect registration obligations.

Bolt vs HMRC: Background of the Case

Bolt's dispute directly concerned the VAT treatment of ride-hailing services under TOMS. The company operated as principal, purchasing transport services from self-employed drivers and resupplying them to passengers through its platform. The company sought confirmation from HMRC that its services qualified for TOMS, which would allow VAT to be calculated on its margin rather than the full passenger fare. HMRC rejected this position.

In December 2023, the FTT ruled in Bolt's favor. The UT subsequently dismissed HMRC's appeal in March 2025, concluding that Bolt's services could fall within the scheme. HMRC then appealed to the Court of Appeal, which reviewed the earlier judgments and relevant Court of Justice of the European Union case law.

The Court of Appeal overturned both previous decisions and ruled in favor of HMRC, finding that Bolt’s ride-hailing services did not qualify for TOMS. Consequently, Bolt became liable for approximately GBP 190 million in outstanding VAT.  Bolt subsequently sought permission to appeal to the Supreme Court. In September 2026, the Supreme Court refused permission, leaving the Court of Appeal's decision in place.

Uber vs HMRC: The Origins of the Dispute

In 2023, Uber appealed HMRC’s VAT assessments, disputing tax liabilities totalling GBP 1.4 billion. As a result of the appeal, Uber was required to deposit the disputed tax sums while the proceedings were ongoing.

In January 2024, HMRC asked the First-tier Tribunal (FTT) to suspend Uber’s appeal until the separate Bolt VAT case had been decided. HMRC argued that the outcome of Bolt’s appeal would provide important guidance on whether mobile ride-hailing services could fall within the TOMS, the central legal issue in Uber’s case. Uber opposed the suspension, arguing that the delay would cause commercial prejudice.

On March 4, 2024, the FTT granted HMRC’s application to stay the proceedings. The FTT concluded that the Upper Tribunal’s (UT) decision in the Bolt case would provide authoritative guidance and could potentially determine the outcome of Uber’s appeal. It also found that the benefits of waiting for that decision outweighed the commercial harm Uber might suffer from the delay.

The FTT also acknowledged the possibility of further appeals, potentially extending the proceedings to the Supreme Court, but considered the risk of evidence becoming outdated to be limited. It emphasized that resolving the shared legal questions first would help both parties and the tribunal assess the evidence properly and ensure that Uber’s case was decided fairly and justly.

Further, Uber’s attempts to challenge the suspension of its VAT appeal were rejected by the FTT on March 19, 2024, and by the UT on May 24, 2024.

On March 24, 2025, the UT ruled in favor of Bolt. The following month, HMRC confirmed that it would not enforce new VAT assessments against Uber while its appeal against the Bolt decision remained unresolved. However, this did not automatically entitle Uber to recover the GBP 1.4 billion it had deposited in connection with its own appeal.

Uber then asked HMRC to repay the deposit. Uber relied on HMRC’s own guidance, which indicates that repayment would ordinarily follow an adverse UT decision unless there was a genuine risk that the money could not be recovered. HMRC rejected the claim for three reasons: the request overlapped with the ongoing litigation, no rule allowed repayment while appeals were pending, and repayment would put public revenue at risk.

The dispute intensified on May 28, 2025, when the UT permitted HMRC to appeal the Bolt ruling to the Court of Appeal. In June 2025, Uber attempted to address HMRC’s concerns about recovering the money by offering financial guarantees and providing evidence of its parent company’s substantial financial resources. Nevertheless, HMRC maintained that a genuine risk of non-recovery existed and refused to accept the guarantees in place of the deposited funds.

The dispute between Uber and HMRC has widened beyond whether ride-hailing services qualified for the TOMS. Uber is also challenging HMRC’s handling of the deposited funds, arguing that retaining such a substantial sum is unjustified while the underlying VAT dispute remains unresolved.

The Central Question

Both disputes raise two related but distinct questions: who supplies the passenger journey, and how should that supply be taxed? The principal-versus-agent distinction determines whether an operator makes the transport supply itself or merely arranges a transaction between a driver and passenger. The Bolt case, which is vital for Uber's case, addressed a separate question: whether an operator supplying transport as principal could calculate VAT under TOMS.

The Court of Appeal's decision in Bolt demonstrates that acting as principal does not automatically make a business eligible for TOMS. The nature of the services supplied and the statutory conditions of the scheme must also be considered.

What Happens Next?

The first thing to watch is how the FTT rules in Uber’s case. It is likely to follow the Court of Appeal’s decision in Bolt, but that does not mean Uber will accept the result. It may appeal, potentially all the way to the Supreme Court.

In Bolt’s case, the Supreme Court refused permission on the basis that no arguable point of law of general public importance was raised. That refusal is not a substantive ruling on the VAT issues and should not be read as endorsing the lower court’s reasoning. The legal significance of the dispute therefore still rests on the Court of Appeal’s judgment and the scope of its conclusions.

The Bolt outcome strengthens HMRC’s position, but it is not a final judgment against Uber. For operators, the practical message is to review contracts, invoicing and VAT accounting now to ensure they match the business model they claim, particularly given the January 2026 changes.