From today, users of the ride-sharing app, Uber across the UK should be prepared to pay higher fares. This follows a decision by a high court that Uber should be regarded as a contractor and not as an agent.
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Change in business model
The December 2021 ruling means, a VAT of 20% will be applied to rides booked via the app. This would be included in the fare and not displayed to the user.
It also means that now when users of the app book a ride on the app, they will be contracting directly with the company for the transportation services and not with the driver.
The company offered this explanation in an email to its users announcing the coming into force of that ruling.
An Uber spokesperson told The Guardian:
We have completed the changes to our business model as required by law. Other operators in London are also required to make changes to their models to comply with the relevant law. Uber operates in an intensely competitive market and we are committed to always offering consumers affordable prices. As always, riders will get a trip price before booking their journey.
Increasing cost of transportation
The ruling affected only Uber’s biggest market, London, but the company is making the changes nationwide in anticipation of further legal charges along the same line. The spokesperson also hinted that fares may differ from city to city.
A reduction in the number of drivers during the pandemic, compelled the company to increase fares by 10%. That was done in November in a bid to attract more drivers.
The latest announcement is coming barely weeks after Transport for London increased its public transport fares by nearly 5% in London and 3.8% in cities across England and Wales.