“Taxi tax” – from 2 January 2026, 20% VAT will be added to private hire vehicles from ride-sharing apps such as Uber and Bolt. Some ride-sharing apps currently exploit a “loophole” intended for tour operators, to only pay VAT on their profit margin, rather than on the full fare. The change will apply to all private-hire trips. The VAT increase is likely to be passed on to consumers, meaning a £15 fare is likely to increase by around £3. This change does not affect taxis hailed in the street, where the service is provided directly by the driver to the passenger, nor does it affect traditional tour operators who buy in mini-cab journeys to resupply as part of a travel package.
Low value imports – the customs duty relief for goods imported into the UK valued at £135 or less, will be removed from March 2029 at the latest. VAT is already due on these goods following changes in 2021. The US recently ended its tariff-free imports, and the EU will withdraw its €150 threshold in March 2028. The change will affect goods sold direct to UK consumers by overseas sellers such as Shein and Temu.
Penalties for late VAT payments will increase from 1 April 2027. In addition, the government will invest £59m in new technology over the next five years to provide real-time digital prompts for VAT filing software from April 2027
Electric vehicles – the anticipated new pay-per-mile Electric Vehicle Excise Duty (eVED) on electric cars is set to be introduced from 1 April 2028. The eVED, which will be 3p per mile for electric cars and 1.5p for plug-in hybrids will be payable in addition to vehicle excise duty. Whilst this is expected to tackle the government’s problem of lower receipts from fuel duty as the UK moves towards less polluting vehicles, it could discourage future electric car-take up. For an average driver covering 8,000 miles, the additional eVED cost will be around £240, and the rate per mile will rise in line with CPI inflation each year
Fuel duty – the rate freeze since 2010-11, due to end in April will be extended for another five months until September 2026. After this it is likely to increase with inflation, unless the rise is cancelled in the meantime.
Sugar tax – currently this mainly applies to fizzy drinks but will be extended to ready-to-drink bottles and cartons of milk-based drinks including milkshakes, chocolate milk and the like, as well as canned lattes etc. Sugary drinks made in coffee shops will not be affected…although hot takeaway drinks are liable to standard-rate VAT as are drinks consumed inside coffee shops.
Gambling – duty paid by bookmakers and similar companies is to increase. Remote gaming duty (RGD) levied on the earnings of online casinos will rise from 21% to 40% from April 2026. In addition, a new online-only Remote Betting Rate of general betting duty, of 25%, will be introduced from April 2027. But there is good news for all bingo and racing fans, as remote bets on horseracing will be excluded from the new remote rate and will remain at 15% and bingo duty will be abolished from 1 April 2026.
Charity VAT relief – a new VAT relief will be introduced from 1 April 2026 for business donations of goods to charities for distribution to those in need or use in the delivery of their charitable services.
VAT Tour Operators’ Margin Scheme — supplies by private hire vehicle or taxi operators – GOV.UK