Uber will increase its prices by up to 20% Business

Uber will raise prices for up to a fifth Tuesday in another blow to commuters already facing higher fares for public transport.

The company is increasing its charges after a High Court ruling forced it to start charging VAT.

The move will add further strain to household budgets amid a cost of living crisis and is likely to erode its position as a more affordable option than black cabs.

Uber has yet to confirm its new pricing structure, but the increase could be as much as 20% if it tries to recoup the full VAT bill. He said the details are commercially sensitive and price increases will vary from city to city.

The increases come after a 3.8% rise in rail fares earlier this month added more than £200 to the cost of some annual passes.

In London, Mayor Sadiq Khan has hit commuters with an anti-inflationary increase in Tube fares by an average of 4.8%, while some bus fares will rise by 6.5%.

Uber was forced to raise prices following December’s landmark court ruling. The court said private hire operators in London should contract directly with passengers, rather than the current legal setup in which passengers and drivers enter into a relationship.

Uber previously took a 25% cut, with passengers contracting with drivers. From now on, he will collect the fares himself and will pay the driver directly.

A spokesperson for Uber said, “We have completed 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 current law.

“Uber operates in a fiercely competitive market and we are committed to always providing consumers with affordable prices. As always, riders will be provided with a trip price before they book their trip.”

The company’s gross bookings in the UK in the first nine months of 2021 were $1.7bn (£1.3bn), which would mean an annual VAT bill of hundreds of millions of pounds if applied nationwide. London is by far the company’s biggest market in the UK and one of its top five globally.

Uber has gained a foothold in the capital by offering cheaper rides than its competitors, but some users have complained that they now pay more than for a black taxi.

Uber was already raising prices last year due to a lack of drivers after the Covid pandemic. The company raised its prices by 10% in London in November 2021 as it struggled to recruit. This was the first price increase in 2017.