Major VAT Change for London Uber Drivers
How Will This Affect Your Pay?
Uber’s UK boss Andrew Brem revealed that London drivers could boost their earnings by signing up for VAT after recent tax rule changes. Driver payments will now be split:
- VAT-registered drivers: Get trip payment + 20% VAT added by Uber
- Non-registered drivers: Only receive the base trip payment
Brem stressed this is a big shift: "Drivers should get tax advice—many could be better off registering, especially using the Flat Rate Scheme."
Why Registering for VAT Might Pay Off
The Flat Rate Scheme lets drivers keep part of the collected VAT instead of claiming expenses individually. Benefits include:
- Higher take-home pay for drivers with lower business costs
- Potential to reclaim VAT on fuel, maintenance, and other expenses
Uber partnered with accounting firms to give drivers free personalized advice on whether VAT registration suits their situation.
Passengers Face Higher Fares Too
Brem criticized the policy change, warning it’ll hit riders’ wallets:
"I’m deeply disappointed… A VAT hike means higher prices in London, which likely means less work for drivers."
Fares now include 20% VAT because Uber must tax the entire ride cost (not just their commission) after recent court decisions.
| What Drivers Need to Consider | Pros ✅ | Cons ❌ |
|---|---|---|
| Extra 20% per trip | More paperwork & tax filings | |
| VAT savings via Flat Rate Scheme | Quarterly VAT returns required | |
| Reclaim VAT on car expenses | Unknown demand drop due to pricier rides |
The Bottom Line
While paid more per trip, drivers risk fewer rides if passengers opt for cheaper transport. Tax planning is now crucial—Uber drivers must weigh VAT registration against admin hassle and potential demand changes. Brem urges: "Run your numbers or talk to experts—this could significantly impact your income."
(Image credit: Uber)
Image Credit: www.taxi-point.co.uk
