Private Hire Vehicle Operators excluded from using TOMS from 2 January 2026
posted 26th November 2025
It's not often that my very "niche" specialism within VAT becomes one of the main announcements in a UK Budget. However, here we are - the Government is very proud of itself for introducing an addition to the TOMS legislation which it assures us gives "certainty" to the industry and takes into account a balanced view of all operators - yay!
The Bolt TOMS case is currently going through the courts and so far Bolt has been successful, with the case due for hearing at the Court of Appeal in May 2026. The case questions whether the provision of private hire vehicle services (taxis in this case) fall within TOMS. So far, the courts have agreed that they do fall within TOMS, because the services are of a type ordinarily provided by tour operators and are themselves travel services bought and sold without material alteration.
Anyway, to end any uncertainty, HMRC have decided to ensure that private hire vehicles do not fall within TOMS going forward....but only in some situations by some people.
What is the change for private hire vehicle operators (PHVO)?
Due to some other non-VAT court cases, PHVOs operating in London have to act as principal. PHVOs operating outside of London can choose to operate as principal or agent. Many operators which act as principal use TOMS because it is an advantage when selling to consumers or other businesses which cannot recover the VAT. Many of the self-employed drivers which sell their services to the PHVO are non-VAT registered because they do not meet the £90k threshold, so PHVOs will buy these services in, have no VAT to recover and then either use TOMS and account for VAT paid on the margin only, or do not use TOMS and account for VAT on the full selling price. This means TOMS is often beneficial (or perhaps neutral for B2B services).
Anyway, the change is that:
- "suppliers of private hire and taxi journeys (will be excluded) from the VAT TOMS, except where these journeys are supplied in conjunction with, and are ancillary to, certain other travel services."
- "‘Taxi and private hire vehicle’ have their ordinary English meaning and HMRC interpret this as including similar services of transporting a person from A to B at the direction of the passenger. For example, a chauffeur service. The mode of transport is not confined to road vehicles but can also be provided by, for example, a boat, aircraft, or any other vehicle designed to transport passengers."
Note that this change does not give a blanket exclusion from TOMS to the supply of private hire vehicles, just to the type of operator in question. It also extends the exclusion from TOMS to private hire providers of other modes of transport in some circumstances.
Which leads us to
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What is a PVHO?
Its not wholly clear. There seems to be a scale - at one end sits Bolt and Uber and at the other end sits the "traditional tour operator". HMRC have said that "the legislation is not intended to change the rules as they apply to ‘traditional’ tour operators that may supply a taxi ride to get a customer to or from a hotel, an airport or port. That is, where the taxi ride is supplied in conjunction with and is ancillary to the principal supply of the accommodation or flight, then the exception to the exclusion can be applied. In this example the TOMS can apply. The principal supply of the accommodation or transport service can be bought-in or provided in-house." However they then go on to say that if a hotelier books a taxi for a guest seperately from the hotel booking, this is now not a tour operator activity and TOMS cannot be used. So, now the hotel is a PVHO for this service but not others?
A related point is that HMRC have always been keen to bring "non-traditional businesses" into the scope of the meaning of "tour operators" for TOMS purposes (events companies, charities, schools, for example). So, there appears to be a sliding scale, and whether or not someone is a tour operator now seems to differ between different types fo travel services. So, I'm not sure how helpful this is in aiding taxpayers to confirm their own VAT treatment.
It also concerns me that for vehicles other than taxis, what do we mean by private hire? Is a charter a private hire? Private jets? Yachts? Will we now see businesses from overseas be required to register in the UK for these types of services?
So based on what I have read so far I think my takeaways are:
- Businesses in competition with Bolt and Uber and smaller operators providing these same services now cannot use TOMS. I would advise businesses selling journeys outside of London to consider whether the agency model may be of benefit.
- "Traditional" tour operators selling packages including a taxi service as well as accommodation and other transport servies typially sold within TOMS (such that the taxi service is ancillary) can probably continue to use TOMS.
- Businesses which are not traditional tour operators or similar in nature to Bolt and Uber, I really couldn't say but I expect the question of whether the private hire transport is ancillary to some other travel service will be key. This is perhaps an area which needs some refinement from HMRC as I think this gives a lot of room for error.
- Businesses operating a similar model to Bolt/Uber but for other types of transport - e.g. jet charters, yacht charters etc should look very carefully at the legislation and guidance as it develops. At the moment, I can't see enough information to give a clear definition either way, and I think this is a risk for operators both in the UK and overseas operators supplying therse services in the UK.
A note on timing
If you have managed to confirm whether or not you're caught by this change, one other area of note is timing. The "time of supply" of a TOMS service is when it takes place (departure) whereas the time of supply of non-TOMS services is usually the earlier of the payment or invoice date.
Where businesses supply "on-demand" services, ths probably wont be an issue. However, other businesses which have been using TOMS to date but which do not sell these services "on demand" will need to adjust to ensure that VAT is not double-counted, or non-counted.
I would also note that, if you are using TOMS for on-demand taxi services, please note that the Bolt case is still being appealed and will be heard at the Court of Appeal in May 2026. As such, please do apply this with caution as the taxpayer has not ultimately won yet.