New rule hailed as big increase for black cab drivers: ‘It is a landmark step for fairness’ | EUROtoday

Black cab drivers are hailing a ‘landmark step’ after the federal government enforced larger taxes on on-line minicab companies.

The Tour Operators Margin Scheme, designed to considerably scale back the VAT paid by tour operators and vacation coach journeys, was being misused by on-line minicab companies.

The Treasury stated these companies had been “illegitimately using a niche scheme to avoid tax”.

Chancellor Rachel Reeves stated in an announcement: “We’re putting the brakes on the illegitimate use of a niche tax scheme to protect everyday cabbies.”

The scheme permits journey and vacation companies to solely pay VAT on the revenue they make on package deal journeys.

The authorities stated this sometimes reduces the efficient VAT charge to 4 per cent.

Steve McNamara, the overall secretary of the Licensed Taxi Drivers Association, which represents black cab drivers, stated: “For too long, drivers and small operators paying the full 20 per cent VAT have had to compete with online mini cab firms benefiting from a niche tax scheme.”

He added: “The government’s decision to apply VAT to all private hire journeys is a landmark step for fairness and integrity in our industry.”

Andrew Brem, Uber’s normal supervisor for the UK, stated the change will imply costs rise for passengers in London.

“The government’s action today to change the rules will mean higher prices for passengers in London, and less work for drivers, when people are already struggling with the cost of living,” he stated.

“The courts have twice ruled that the Tour Operators’ Margin Scheme applied to operators like Uber. This decision also establishes the absurd situation where a trip in London will be taxed at a different rate than a trip anywhere else in the UK.”

The reform is predicted to herald an £700 million a 12 months and the brand new measure was first introduced by the Chancellor within the funds.