Autumn Budget 2025 Decoded: VAT Roundup

Whilst no doubt overshadowed by changes elsewhere in the Autumn Budget 2025, there were announcements relating to Value Added Tax (VAT) which could impact businesses in specific industry sectors.

• VAT on Private Hire Vehicle Services
  Suppliers of private hire vehicle and taxi services (such as Uber) will be excluded from the scope of the Tour Operators’ Margin Scheme (TOMS) from 2 January 2026, except where these are supplied in conjunction with certain other travel services. Uber, amongst others, has relied on TOMS to reduce its VAT liability (as Uber drivers are not typically VAT registered). This could of course mean PH taxi fares rise to reflect this increased liability.
• e-Invoices
  From April 2029, businesses will be required to issue all VAT invoices as e-invoices, with a roadmap on implementation to be published next year. The government presents this as a move ‘to drive productivity further’ (because who can argue with government telling businesses how to be productive?) It is worth noting that business to business invoices are almost exclusively raised as e-invoices, so the impact of this move is likely to be limited. Invoices issued to private persons should not in principle be impacted.
• Charity Tax Relief
  A new VAT relief will be introduced from 1 April 2026 for business donations of goods to charity for distribution to those in need or use in the delivery of their charitable services. Further information is needed on this proposed relief to assess its impact.
• VAT Payments
  The government will publish a consultation in early 2026 considering ways VAT liabilities can be paid promptly without the taxpayer falling behind on their payments, including requiring more tax payments by direct debit. In a similar vein, the government will increase the penalties due for late payment of VAT from 1 April 2027. Again, we await details of the specific changes.

If you have any questions about any the above, please don’t hesitate to contact us or get in touch with your usual contact at Mercer & Hole.