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Uber rewrites contracts with drivers to avoid paying UK’s new ‘taxi tax’

3 days ago
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Uber has swerved paying millions of pounds to the UK exchequer under Rachel Reeves’s new “taxi tax” after the ride-hailing app rewrote contracts with its drivers.The move came as rules announced in November’s budget took effect, which adjusted how VAT is payable on minicab fares and would have resulted in the whole Uber fare becoming subject to the 20% sales tax.In November, Reeves told the Commons the changes would end up “protecting around £700m of tax revenue each year”.However, updated terms issued to Uber drivers from January 2026 mean the technology firm will act as an agent, rather than as the supplier, of transport services outside London.The move means drivers make a contract directly with their passengers – so they must charge any VAT due on the fare, while Uber only adds VAT to its commission.

As most drivers are not thought to be making more than £90,000 in bookings a year, and therefore do not have to charge VAT, the majority of Uber fares outside London will avoid becoming more expensive, since the 20% sales tax will not apply.The new contracts do not relate to London, where the agency model is not allowed under Transport for London rules.As a result, Uber passengers in the capital will pay VAT on their fares.Uber’s change to the terms with its drivers has been expected since the budget announcement.At the time, Andrew Brem, Uber’s regional general manager for the UK, said: “The government’s action today to change the rules will mean higher prices for passengers in London, and less work for drivers, when people are already struggling with the cost of living … This decision also establishes the absurd situation where a trip in London will be taxed at a different rate than a trip anywhere else in the UK.

”An HM Treasury spokesperson said: “Ending this use of a niche tax scheme by online minicab firms will both benefit everyday cabbies with a fairer tax system and raise money to help deliver the country’s priorities – cutting the cost of living, cutting waiting lists, and cutting debt and borrowing.”It did not say if Uber’s changes would affect its estimate of “protecting” £700m a year of receipts from the new policy.
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Downing Street has only itself to blame for lack of grip on Whitehall, say experts

Downing Street only has itself to blame for failing to exercise power, Whitehall experts have said, after a former No 10 adviser said that lobbying by a “political perma-class” had distracted the government from voters’ priorities.Paul Ovenden prompted a debate about how Keir Starmer’s administration is governing after criticising what he described as the “sheer weirdness of how Whitehall spends its time”.In particular, the former Downing Street strategist highlighted the effort spent on freeing the British-Egyptian activist Alaa Abd el-Fattah, who has previously posted on X about killing Zionists, saying colleagues had joked about the campaign as a “totem of the ceaseless sapping of time and energy by people obsessed with fringe issues”.Ovenden hit out at what he called the “supremacy of the stakeholder state”, arguing the government had been hobbled by a “complex coalition of campaign groups, regulators, litigators, trade bodies and well-networked organisations”, although he stressed that many civil servants themselves wanted to change the system.He claimed the stakeholder state was “incubated by a political perma-class that exists within every party and every department – one whose entire focus is on preserving their status within a system that gives them meaning”

2 days ago
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Distractions over Abd el-Fattah were running joke, says ex-Starmer adviser

Efforts to free Alaa Abd el-Fattah regularly distracted Keir Starmer’s government from focusing on bread-and-butter domestic political issues, according to one of the prime minister’s closest former advisers.Paul Ovenden, who stood down last year as the prime minister’s director of strategy, said the case of the British political prisoner became a “running joke” among those in government frustrated by the slow pace of change.Abd el-Fattah’s case has dominated headlines since he was freed from an Egyptian prison to return to Britain on Boxing Day, only for a row to erupt over social media posts he wrote a decade ago in which he advocated killing Zionists.Ovenden said the amount of time dedicated to freeing Abd el-Fattah was symptomatic of a government that has struggled to stay focused on voters’ core priorities in the face of pressure from “well-connected” activist groups and arms-length bodies.“We would be having long meetings on the priorities of the government, and often they would be railroaded via any other business into discussions of this gentleman,” he told BBC Radio 4’s Today programme

3 days ago
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A new year brings new battles for democracy and for Labour | Letters

“Did 2025 mark the end of British parliamentary democracy as we know it?” asks the headline on Andy Beckett’s article (25 December). Let’s hope not, but the case for moving to a proportional-representation-based system seems clear. The disillusion with Westminster, however, surely stems from the growing gap between House of Commons politics and extra-parliamentary politics in workplaces, communities and the streets. Hundreds of thousands have continued to march on Palestine in 2025. Some nods to this have been made – recognition of a Palestinian state

3 days ago
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Nativism and the disintegration of the UK

Stalking your editorial on the new political geography emerging in Britain (25 December) is the fear of disintegration. This is a political outcome that needs to be taken seriously. Despite the “British” rhetoric of the political class, and the profusion of union flags in highways and byways, the continuation of the United Kingdom in its current form cannot be taken for granted.Twentieth-century history shows us that when plurinational polities collapse, they do so fast. Crucial conditions for the collapse of plurinational polities are the weakening of pro-integration parties, and the attitudes of political elites in the majority nation

3 days ago
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Labour needs complete ‘reset’ to defeat Reform UK threat, says strategist

Keir Starmer does not have enough of a plan to defeat the “existential threat” that populism poses to UK democracy and should undertake a “fundamental reset”, New Labour’s former advertising strategist Sir Chris Powell has warned.Powell, who is the brother of Jonathan Powell, Starmer’s national security adviser, warned there were just three years to stop the “new and terrifying threat” of populists, suggesting Reform UK could represent a danger to democracy and national institutions.Writing for the Guardian, he said: “Here in the UK, where is the urgently needed counter plan on a huge scale, to thwart and head off such an existential threat? It is simply not in place, nor does it appear to be even at the planning stage.“We are at a very dangerous moment. We simply cannot afford to allow Reform UK to have a free run, and become established and entrenched as a credible potential government in the minds of disenchanted voters

3 days ago
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‘They misjudged Caerphilly’: how the Reform juggernaut backfired in Welsh byelection

Yuliia Bond works two jobs, raises two children and is studying at university. In the autumn, she also found time to take on Reform UK when it tried to win the Caerphilly byelection.Bond, a Ukrainian refugee who has settled in south Wales, said she could not remain silent as Reform tried to win the seat in the Senedd (Welsh parliament ).“Members of our Ukrainian community spoke up,” Bond said. “We challenged the disinformation because we didn’t want our neighbours to be misled into resenting us

4 days ago
technologySee all
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Elon Musk’s Grok AI generates images of ‘minors in minimal clothing’

2 days ago
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Google AI Overviews put people at risk of harm with misleading health advice

2 days ago
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Uber rewrites contracts with drivers to avoid paying UK’s new ‘taxi tax’

3 days ago
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Apple reportedly cuts production of Vision Pro headset after poor sales

3 days ago
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‘They sowed chaos to no avail’: the lasting legacy of Elon Musk’s Doge

3 days ago
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Tesla publishes analyst forecasts suggesting sales set to fall

4 days ago