Uber had brought the case following a 2021 decision by the United Kingdom's Supreme Court that its drivers were workers, which had an impact on Uber's tax and other obligations.
The company sought a declaration that private-hire taxi operators enter into a contract with passengers and London's High Court ruled in its favour last year.
That decision meant that operators must pay value added tax (VAT) at 20%, but the ruling was reversed by the Court of Appeal on Monday following a challenge by private hire operators Delta Taxis and platform Veezu.
Delta's lawyer Layla Barke-Jones, from the firm Aaron & Partners, described Monday's ruling as "a victory for the taxi industry and all those who depend on it".
"The collective aim for us and our client in this case has always been to protect passengers and taxi firms alike, so the news customers outside London won't have to have VAT forced upon them will bring a collective sigh of relief," Barke-Jones said.
An Uber spokesperson said: "We will review the judgment of the court in detail and consider our next steps."
The Uber spokesperson added that "requirements for operators are now inconsistent between London and most of the rest of England and Wales".
Veezu did not immediately respond to a request for comment.
In a separate case, Estonian ride-hailing and food delivery startup Bolt last year won an appeal against Britain's tax authority HMRC about on what it has pay VAT at 20%.
HMRC's appeal against the ruling that Bolt is only liable for VAT on its margin, rather than the full cost of the trip, is due to be heard in November.
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