Uber's £2.6bn VAT Dispute: What It Means for Self-Employed Drivers

Tax Queen

Tax Expert @ Pie

3 min read

What This Means for Your Tax Return

If you drive for Uber as a self-employed private-hire driver, this dispute doesn't change how you fill in your Self Assessment return. HMRC sent the VAT assessments to Uber UK as the operator, not to individual drivers, and no Tax Tribunal has ruled on them yet.

Your job stays the same. You report your driving income and allowable expenses for 2025-26 and file online by 31 January 2027. Following the HMRC rules for digital record keeping now will make that much easier.

Why Uber Is Disputing HMRC's VAT Assessments

Uber has disclosed that it received HMRC VAT assessments totalling about £2.6bn, covering the period from March 2022 to December 2025. The dispute is about Uber UK's use of the Value Added Tax (Tour Operators) Order 1987, which let it work out VAT on its margin (its cut of each trip) rather than on the full value of each booking.

Uber says it has paid £1.4bn and expects to pay a further £1.2bn so that it can appeal, and that these payments don't mean it accepts the assessments. Uber also says a law change from 2 January 2026 stopped UK private-hire operators using this margin treatment for supplies made from that date. [Editor Note: Unverified detail - check the 2 January 2026 private hire VAT change against HMRC guidance]

VAT (Value Added Tax) is a separate tax from the Income Tax you pay through Self Assessment. You only have to register for VAT yourself if your taxable turnover goes over £90,000 in any rolling 12 months, and our guide to the VAT registration threshold for freelancers explains how to check.

Your Income and Expenses as a Driver

Whatever the Tribunal decides, your taxable profit is still what you earn from driving minus your allowable expenses. Keep every weekly or monthly earnings statement so the income on your return matches what you were actually paid.

Running costs such as fuel, insurance, servicing and licensing fees can reduce your taxable profit. Our guide to claiming vehicle expenses on your Self Assessment explains what you can claim and how.

If the way your trips are priced or paid changes as the VAT position settles, keep any notices you receive. They'll help you explain a sudden rise or fall in your income if HMRC ever asks.

Getting Ready for 31 January

With less than three months until the online deadline, now is a good time to gather your 2025-26 driving records. If you check each statement against your bank account and save fuel and repair receipts as you go, there will be very little left to do in January.

If you're a driver with regular app payouts and lots of small running costs, Pie Tax is self-assessment software that pulls in your income, sorts your vehicle and other allowable expenses, and lets you file your Self Assessment to HMRC from one place.

Once your figures are in one place, filing on time is the easy part. Try Pie Tax for free and get your driving income ready well before the deadline.