Taxi and Private Hire Drivers
Whether you’ve been a Taxi or private hire driver (Uber, Bolt, Deliveroo etc.) for a while or are just stepping into it, a tax return is one of the responsibilities you will have.
Although drivers can be classified as employees, ensuring certain rights, you will still need to file a tax return annually to ensure you are paying the correct amount of tax. In order to submit a return, you require a Unique Tax Reference (UTR), this can be obtained via you personal tax account through the government gateway portal. The deadline for online submission for each years tax return is 31st January following the end of the tax year. Due to workload, it’s not uncommon for drivers to miss the deadline, resulting in a penalty, or falling foul of HMRC due to errors in their tax return submission.
Unless you’re an accountancy expert, dealing with the complexities of self-employment taxes and meeting deadlines for submission can be complicated, but it doesn’t have to be. The key is to understand what income taxes you are responsible for as soon as possible, and what allowable expenses you can claim.
At Tax Surgeons, our team specialises in organising and computing tax returns for drivers. We ensure we surgically optimise your tax returns, claiming any allowable expenses available to you and maximising your profits. Giving you more time to focus on growing your income.
Keeping records
The key to a seamless tax return is staying organised with records. It is important to keep records of all income related to you work and any costs which might be deductible as an expense. HMRC have a simplified expenses scheme, where claims on mileage can be made. This method is not usually optimal for drivers as there are quite a few expenses which add up that can be deducted as allowable expenses. Some of these could include:
Fuel costs
Car insurance premiums
Lease / rent payments on vehicles
Legal and accounting fees
Road tax and MOT fees
Vehicle maintenance and repairs
Parking and road toll fees
Phone usage / radio hire
GPS or other traffic management systems
Website maintenance, Marketing and advertising
These expenses help lower the taxable profit and bring down your tax bill. Maintaining evidence of expenses through receipts and invoices helps make the tax return process easier. It is also important to keep track of any personal miles or usage of your vehicle which is not work related, as this usage will have to be deducted from the allowable expenses.
Can taxi and private hire drivers claim mileage?
Yes, just like any other type of allowable expenses, drivers can claim mileage but only if these occur as part of the job (i.e. during your shift). If a fare takes you out of your licensed area you can still claim mileage on the trip, but if you live outside the licensed area, you won’t be able to claim the mileage on your commute to work.
In general, you have two options for working out your travel expenses:
Using simplified expenses, you can claim a flat rate for every mile you travel. This works out as 45p per mile for the first 10,000 miles in a tax year, reducing to 25p per mile after that. Benefits of this method are ease of use and less record keeping. However, expenses such as fuel, insurance and maintenance cannot be claimed in addition to the mileage allowance.
Listing all your expenses individually. As complicated as it may sound, guidance from a good accountant can make this process much easier.
Note: Black Cabs are classed as being for commercial use, so they’re not eligible to claim using the simplified expenses method.
At Tax Surgeons, we understand that your time and energy are best invested in growing your business and maximising your income. Our mission is to alleviate the burden of record-keeping and tax calculations, allowing you to concentrate on what you do best—running your business.
Need expert help with a Self Assessment issue?
Speak to one of our qualified accountants to see how we can help you.
Register for Self Assessment
Registering for self assessment is a fairly simple process, but can get tricky if you are unfamiliar with the process. Follow our guide below to help you navigate the process and be ready to file your next tax return.
Step 1: Create a Government Gateway account
You’ll need a Government Gateway account to sign up and use most online tax services. Head to HMRC online services: sign in or set up an account. Sign up with your full name, email and password, and your user ID will be sent to the email address you provided.
Step 2: Add a Tax
Once you’ve logged into your Government Gateway account, you’ll see the options across the top, select “business tax account”. From this page, you will be able to select “get online access to a tax, duty or scheme.”. Now you can select and register for self assessment.
Step 3: Select Self Assessment for Individual/Sole Trader
From the list you can select and register for self assessment for individual or sole trader. It’s important you select this one as there are different rules for setting up other types of businesses. Once registered your Unique Tax Reference (UTR) will be sent out to you.
What happens next?
HMRC will send out 2 letters, one containing your new UTR, and one with an activation code for your newly added tax, you will require this code to activate your account online.
You can then sign into your Personal Tax Account, which is where you’ll find information like what your tax code is, how much tax you owe, when your next Self Assessment is due and what tax you’ve paid in previous years.
Deadlines
Make sure you tell HMRC about your sole trader status by 5th October in your second tax year. For example, if you start your business in November 2023:
Your first tax year runs 6th April 2023 to 5th April 2024
Your second tax year runs 6th April 2024 to 5th April 2025
The deadline to register using this example is 5th October 2024. The online tax return filing deadline for this example would be 31st January 2024.
Tax Surgeons Services
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