UK Treasury bars minicab firms from using the Tour Operators Margin Scheme, a tax arrangement that let them pay lower VAT, effective 2 January 2026. The move aims to prevent online minicab operators from gaining a VAT advantage over traditional black cabs, creating a fairer market for drivers. Cab drivers and small operators outside London, who do not use the scheme, will not be affected. Chancellor Rachel Reeves said the government will use the £700 million a year saved to reduce the cost of living, cut waiting lists, and lower debt and borrowing. The Treasury cited the scheme’s misuse by a few large online firms that previously paid only 4 % VAT on fares, instead of the standard 20 %. Small operators outside London and all black cabs will not see any changes to their VAT rates.
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https://www.gov.uk/government/news/black-cabs-backed-with-fairer-tax-system
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