Why is VAT added to the chauffeur rate?
From 2 January 2026, the UK Government increased the VAT on Private Hire Vehicle journeys done by London operators to 20% of the passenger fare. This is displayed in the Payout section.
Because you provide services as a VAT-registered chauffeur, VAT must be added on top of your rate so you can correctly account for it in your VAT return.
If you’re on the Flat Rate Scheme (FRS), you don’t pay the full 20% to HMRC. You pay 10% of your VAT-inclusive earnings, and the difference stays with you under FRS rules.
In the case above, only £7 should be payed to HMRC leaving you £63*.
This article is for informational purposes only and does not constitute tax advice. Partners are responsible for complying with HMRC rules regarding VAT.
Contents are provided for general information purposes only. It does not constitute tax advice. HMRC rules can vary depending on individual circumstances, and you may wish to seek advice from a qualified accountant or tax adviser before making any VAT registration or scheme decisions. If a chauffeur is VAT registered (either with Flat Rate Scheme or without) VAT must be payable by the chauffeur.
*Estimated roughly and might be different based on personal circumstances, seek advice from your accountant.