Uber journeys are rising in popularity for business journeys, but this also means the question of VAT on Uber fares in the UK is a frequent one. This can include whether you can claim VAT back on Uber charges. This guide will explain the specific regulations regarding VAT (Value Added Tax) on Uber fares, including the applicable rates, and the possibility of VAT reclaims.
So, if you have been left confused as a business owner on whether ‘does Uber charge VAT?’ here’s the simple answer:
Yes, there is VAT on Uber fare charges. As a taxi service provider, Uber is required to charge VAT on their fares in the UK. The standard rate of 20% VAT is applied to the total fare amount, and Uber is responsible for accounting for and remitting the VAT to HMRC.
Uber is considered a contractor in the provision of private hire services with the driver. In a recent High Court ruling this means that Uber is now required to charge standard rate VAT on the whole provision of the ride and not just the commission it charges drivers who find work through its app.
That means the whole of the service is standard rated and you can reclaim the VAT on your Uber provided the cost was a genuine business expense.
You can download a copy of your invoices by logging in at riders.uber.com/trips:
- Go to My Trips.
- Select your trip.
- Select view detail.
- Download invoice from the top right-hand corner.
So, the short answer is yes, there is VAT on Uber taxi fares in the UK, but as with anything to do with the UK tax system it is a bit more complicated than that.
This can be a complex area if you operate as a driver of a taxi or private hire car so make sure you read the HMRC full guidance on how vat applies to taxis and private hire cars (VAT Notice 700/25).
We have covered various scenarios below to help you understand when there is VAT on Uber fares.
What is the VAT rate for Uber in the UK?
The VAT rate for Uber rides in the UK is generally set at the standard rate of 20%. This means that 20% VAT is added to the total fare charged by Uber.
The fares charged to passengers for Uber journeys are liable to VAT at the standard rate. Tips voluntarily given are not regarded as payment for a supply and are outside the scope of VAT i.e., you cannot reclaim VAT on a tip paid to an Uber driver.
Can you claim VAT on Uber fares?
In most cases, individuals and businesses cannot claim VAT on Uber fares for personal use. However, if the Uber service is used for business purposes, such as traveling to a business meeting or transporting clients, the VAT incurred on those fares may be recoverable as input tax, subject to the normal VAT recovery rules.
Is Uber VAT exempt or zero-rated?
Uber fares is not exempt or zero-rated but are subject to the standard rate of 20%. However, certain specific transportation services, such as transportation for disabled individuals, may qualify for zero-rating under certain conditions. It is advisable to consult with HMRC or a tax professional for specific circumstances.
Conclusion
Uber is subject to VAT at the standard rate of 20%. While individuals and businesses typically cannot reclaim VAT on Uber fares for personal use, there may be opportunities to claim VAT on fares incurred for business purposes, subject to the relevant VAT recovery rules.
Being aware of the VAT regulations surrounding taxi fares ensures compliance and accurate accounting for both taxi service providers and passengers.
Jon has been in business since 1999, and in that time worked with more than 300 small business clients. As well as being an accountant, he is also an early adopter of tech, and has helped small businesses to leverage the power of their computer systems by creating software to automate and simplify accounting tasks.
