Bolt Challenges UK Over Potential 20% VAT on Private Hire Fares

Ride-hailing company Bolt has issued a warning to the UK government over the ongoing uncertainty surrounding a potential 20% VAT increase on private hire fares. The company revealed that it has withheld £200 million in investment in the UK over the past three years due to the lack of a clear resolution on the issue.

The tax controversy originates from legal rulings that determined private hire operators, rather than individual drivers, are responsible for customer contracts. This interpretation could require companies to apply VAT on fares, leading to higher costs for passengers and affecting driver earnings. The decision has already impacted Uber, which raised its prices in London following a court ruling. A similar situation has emerged as Uber faces resistance over its VAT obligations, highlighting the broader challenges ride-hailing firms encounter under evolving tax regulations. Uber's VAT push has met resistance, raising concerns about the financial burden on both drivers and passengers.

A Supreme Court hearing scheduled for July will further determine whether VAT will apply to private hire operators outside the capital. The outcome could have significant implications for the industry, potentially making private hire services more expensive and less accessible for many passengers.

Bolt has expressed concerns over what it calls an inconsistent tax structure, with VAT rates varying based on location and business models. The company argues that the current situation creates uncertainty for investors and disrupts the private hire sector, which millions of people rely on for transportation each week.

Emily Dalton, head of UK operations at Bolt, warned of the economic consequences:

"The continued uncertainty over VAT on private hire journeys is harming the UK’s economic growth – holding back vital investment and innovation in the UK."

She further emphasized the impact on consumers:

"If the Government presses ahead with this ‘taxi tax’, it will drive up fares, reduce transport options, and hurt those who depend on these services the most."

The Treasury had launched a consultation on the matter last year but has yet to provide a definitive resolution. The government’s decision, or continued inaction, could shape the future of the ride-hailing industry in the UK.