UK Budget 2025: PwC comments on Indirect tax announcements

Victor Cramer, Tax Director, PwC UK 

“Removing taxis from the Tour Operators’ Margin Scheme will have a significant impact on fares where the taxi is booked through a firm or ride hailing service. It may also create a distinction between taxi firm models depending on whether riders' contract with the firm, or directly with the driver. Where passengers contract with the firm, VAT will apply to the full fare. Where passengers contract with the driver, VAT will only apply to the fee charged by the firm to the driver, unless the driver earns more than the VAT threshold (currently £90,000). 

“Separately, the abolition of customs duty relief for low-value imports reflects a clear move to align the UK with international trends and strengthen domestic market protections. By March 2029, these goods will be subject to the same duties as bulk imports, with consultation on new processes expected. Businesses should prepare for increased compliance requirements and potential cost implications as the UK follows similar reforms in the EU and US. 

“The government has also announced a change to the VAT treatment of goods donated to charity by businesses.  Previously, only goods donated for onward sale could be subject to the zero-rate of VAT, whereas the donation of goods for use by a charity would result in a hard VAT cost to the donating business. The change will allow businesses to donate goods for use or resale without incurring a VAT cost when doing so. Businesses will welcome the ability to donate goods which can be used by charity without incurring an additional VAT charge.”

Our full Budget reaction