Dozens of taxi companies have called on Chancellor Rachel Reeves to avoid introducing a damaging tax in the Autumn Budget that could threaten thousands of jobs.

A total of 59 national and regional taxi and private hire vehicle operators have signed an open letter condemning the so-called “taxi tax”.

Reports have suggested that the Chancellor is planning to introduce a 20 per cent VAT rate for private hire journeys when she announces the Autumn Budget on November 26.

The group of concerned businesses have called on Rachel Reeves to meet with the industry to agree on a “fair and sustainable” solution to the matter.

Taxi and private hire firms outside of London do not charge VAT on journeys because drivers are considered to be self-employed contractors.

The industry has warned that a 20 per cent VAT hike would increase costs for millions of passengers across the UK.

They warn that it could also threaten the future of hundreds of small and medium-sized businesses and force taxi drivers off the road.

An open letter sent on behalf of the private hire and taxi sector cautioned that local economies could be damaged, especially the night-time economy, which Labour has been keen to boost in recent years.

Families and residents in rural areas, particularly in Wales, the South West and the East of England, could be hit with fewer transport options, impacting accessibility for millions.

One company, Veezu, stated that more than 50 per cent of its journeys are for “essential purposes” including healthcare, commuting and education.

It claimed that any increase in the cost of an average fare would disproportionately impact households which rely on private hire vehicles.

Nathan Bowles, CEO of Veezue, said: “PHVs keep Britain moving, connecting communities that rely on us for essential journeys, and a 20 per cent VAT hike would hit the elderly, disabled, and rural passengers hardest.

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“The open letter is a united call from operators across the UK urging the Government to confirm that PHVs will not be subject to a 20 per cent VAT rate.”

The Treasury concluded a consultation last August, which looked at VAT rates, although it has yet to publish a formal response to the findings.

Veezu also noted that a Supreme Court decision delivered on July 29, 2025, confirmed that private hire operators may lawfully operate under different business models.

This could include agents, principals and intermediaries. Veezu warned that a VAT hike on taxis and private hire vehicles risks undermining progress.

Mr Bowles called for a clear policy to protect passengers and licensed drivers from rising costs, and to back British businesses.

“Businesses cannot plan, invest or grow while uncertainty remains, and every month without reassurance contributes to the slow erosion of one of Britain’s most essential transport services,” the expert said.

Financial experts have suggested that the Chancellor could be facing a £50billion black hole, with the Government failing to rule out tax rises in the Autumn Budget.

A HM Treasury spokesperson told GB News that the Chancellor makes tax policy decisions at fiscal events, and would not be commenting on any potential changes.