Uber (UBER.N) has lost a significant legal battle in the UK Supreme Court, which unanimously dismissed its appeal on Tuesday, sparing rival taxi operators in England and Wales (outside London) from a 20% VAT charge on their profit margins. The decision upholds a July 2024 Court of Appeal ruling, overturning a previous High Court decision in Uber’s favor.

The case stems from Uber’s attempt to level the playing field after a 2021 Supreme Court ruling classified its drivers as workers, entitling them to minimum wage and holiday pay, and subjecting Uber to VAT on rides. Uber argued that rival private-hire operators, such as Delta Taxis and Veezu, should also be required to enter contracts directly with passengers, thereby incurring the same 20% VAT obligation outside London. However, the Supreme Court ruled that these operators are not required to form such contracts, exempting them from the tax.

An Uber spokesperson noted that the ruling highlights differing contractual protections for passengers in London compared to other parts of England and Wales, but emphasized that it does not affect Uber’s existing VAT obligations. London operates under a distinct regulatory framework, unaffected by this decision.

Layla Barke Jones, a lawyer for Delta Taxis from Aaron & Partners, hailed the ruling as a critical victory, stating it prevented a “crisis” for many private-hire operators. Veezu’s chief legal officer, Nia Cooper, echoed this sentiment, describing the decision as a “triumph” for the UK private-hire sector, averting significant fare hikes that would have resulted from additional tax burdens.

In a related development, Estonian ride-hailing and food delivery platform Bolt recently won a separate case against the UK’s tax authority, HMRC, which sought to impose VAT on the full cost of Bolt’s trips. The ruling, which limited Bolt’s VAT liability to its profit margin, is now under appeal by HMRC at the Court of Appeal. Bolt’s UK senior general manager, Kimberly Hurd, welcomed the Supreme Court’s decision on Uber’s case but called for a unified regulatory framework to ensure consistency across the UK’s ride-hailing sector.

The ruling underscores ongoing tensions in the UK’s private-hire industry, as operators navigate complex tax and regulatory landscapes while competing in a rapidly evolving market.