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A great day or night out ends with getting home safely, and this is why the role of taxi driver is crucial for so many people across the country. Taxi options have increased in recent years, with Uber leading the way in challenging traditional taxi options. Whether you enjoy constant pickups or occasional bookings, we're here to assist every Uber driver.
With more than 3.5 million drivers holding an Uber account globally, and 2022 figures suggesting more than 85,000 UK Uber drivers, a lot of people earn income while driving others. This is great news for people using Uber to travel, but with any earnings source, there are accounting, finances and tax issues for Uber drivers to consider. There are many factors for drivers to consider, including legitimate means to lower tax obligations, and at Auditox Accountancy, we are keen to provide you with thorough accountancy services Uber drivers.
Yes, in the UK, it is necessary for Uber drivers to declare their earnings. Drivers operate as a self-employed contractor, and as such, they are required to:
Register for Self-Assessment: Uber drivers must register with HM Revenue & Customs (HMRC) for Self-Assessment shortly after they start driving.
Report All Income: All earnings from Uber, along with any other sources of money, must be reported on the Self-Assessment tax return each year.
Pay Income Tax and National Insurance: Based on the reported earnings and allowable expenses, drivers will need to pay any due income tax and National Insurance contributions.
Keep Records: Drivers should maintain records of all their earnings and expenses related to their Uber activities. This is essential for accurately completing the tax return and for providing evidence if queried by HMRC.
Failure to declare Uber earnings or any other self-employed earnings can result in penalties and interest charges from HMRC.
While Uber drivers in the UK are not legally required to hire accountants, many choose to do so for several reasons:
Complex Tax Matters: Navigating the UK's tax system can be challenging. An accountant can help ensure that all income is correctly reported and that drivers take advantage of expenses to reduce their tax liability.
Self-Employment Status: Drivers operate as self-employed individuals, meaning they are responsible for their own tax returns. An accountant can assist in completing and submitting the Self-Assessment tax return accurately and on time.
Record Keeping: Keeping track of expenses (bookkeeping), such as fuel, vehicle maintenance, and insurance, can be time-consuming. An accountant can help organise these records and ensure they meet HMRC requirements.
Peace of Mind: Having a professional handle tax matters can provide reassurance that everything is in order, reducing the risk of errors or potential penalties relating to your Uber income. You are solely responsible for all tax year claims, but we are here to help you.
Even with the 2021 landmark ruling that Uber drivers are ‘workers’, and not ‘self-employed’ drivers; drivers are classed as self-employed with respect to tax purposes. They are entitled to holiday pay as taxi and delivery drivers, as they technically work for Uber, but paying taxes is a different matter. Taxi and delivery drivers for Uber must complete self-assessment accounts, which requires a bookkeeping element to their work.
As self-employed individuals, drivers are required to register for Self-Assessment with HM Revenue & Customs (HMRC) and complete a tax return each year detailing their earnings and expenses.
Gig-economy drivers are responsible for paying Class 2 and Class 4 National Insurance contributions based on their profits.
Drivers must pay income tax on their profits after deducting expenses. The rate of tax will depend on the total income and falls within the UK's tax bands.
If an Uber driver's turnover exceeds the VAT threshold (which can change annually), they may also need to register for VAT, submit VAT returns and charge this to their customers.
It's essential for drivers to maintain accurate records of all their earnings and expenses in any tax year. This will help in completing the tax return and in case of any inquiries from HMRC when you pay taxes.
An independent contractor deduct certain expenses related to their work, such as fuel, vehicle maintenance, and insurance, from their taxable earnings.
In the UK, self-employed Uber drivers can claim a range of expenses related to their work. These expenses reduce their taxable profit. Here are some common allowable expenses for drivers:
Instead of claiming actual car expenses, drivers can take the simplified approach to claim mileage allowance (45p per mile for the first 10,000 miles and 25p thereafter).
If not using the mileage allowance, a self employed Uber driver can claim a proportion of the actual costs, such as fuel, servicing, repairs, and insurance.
A portion of the car's cost can be claimed as capital allowances, depending on the CO2 emissions of the car.
If the car is on hire purchase or leased, the interest element on the finance and the lease payments can be claimed.
The cost of private hire licences, MOTs, and additional insurance, such as public liability insurance required for private hire work.
Accountancy fees, membership fees to professional bodies, or subscription to trade magazines related to the profession.
Other claimable expenses include bank charges, parking fees, floor mats, tolls, cleaning fees, refreshments and training for work costs.
Yes, taxi drivers can expense fuel, but how they do so depends on the method they choose for calculating their vehicle expenses:
Simplified Mileage Allowance: If taxi drivers opt for the simplified allowance accounting method, they cannot claim fuel as a separate expense. This allowance is designed to cover all vehicle outgoings, including fuel, maintenance, and depreciation.
Actual Costs Method: If drivers choose to claim the actual costs of running their vehicle, they can claim fuel as an allowable expense. They would need to keep all fuel receipts as evidence.
At Auditox Accountancy, we understand the unique financial challenges faced by drivers. With the gig economy's rise, it's crucial to have an expert by your side to navigate the complexities of tax and accounting. Here's how we can assist:
Personal Tax Returns: We'll ensure your personal tax affairs are in order, helping you submit accurate returns and optimise any reliefs available to you.
Self-Assessment Return For Uber Driver: Our team specialises in completing and submitting the Self-Assessment tax returns specifically tailored for taxi or delivery drivers, ensuring all earnings and business use outgoings are accurately reported.
VAT Registration: If your earnings exceed the VAT threshold, we'll guide you through the VAT registration process and help you understand your VAT obligations.
Insurances Required: Navigate the world of insurance with our guidance. We'll advise on the necessary insurances you should consider to protect yourself and your business.
Claiming Expenses For Uber: Maximise your take-home pay by claiming all eligible outgoings and making legitimate tax deductions. We'll provide a comprehensive list and guide you on what can and cannot be claimed.
Recording for Uber: Keeping track of outgoings can be daunting. We'll introduce efficient methods and tools to simplify this process for you.
Making Tax Digital (MTD) Legislation: Stay ahead of the curve with the MTD requirements. We'll ensure you're compliant with the latest digital reporting and record-keeping obligations.
As accountants for Uber taxi drivers, we'll help you manage income taxes, and hopefully minimise the fear a taxi driver has when they face a tax bill. We are experienced accountants, and as Uber accountants we help you save money, which as a taxi driver means more in your pocket.
For more information on how we help taxi and other drivers with accounts and bookkeeping services, contact us today to see the ways we're offering customers all the information and services they need.
For Uber drivers in the UK, it's important to keep meticulous records of all your expenses, such as fuel, vehicle maintenance, and insurance, as these can be deductible. A digital accounting tool or app that can sync with your bank account is often recommended for real-time tracking.
Common tax deductions available for Uber drivers in the UK include expenses related to fuel, vehicle maintenance, insurance, and even the cost of cleaning your car. You may also deduct a portion of your mobile phone bill, as it's used for your work.
In the event of a tax audit by HMRC, we can represent you to ensure that all your filings and deductions are in order. We are well-versed in the specific tax requirements and potential audit triggers for Uber drivers in the UK.
Calculating car depreciation is crucial for Uber drivers in the UK as it can be a significant tax deduction. The most commonly used method is the "Writing Down Allowance," where you can deduct a certain percentage of the car's value from your taxable income each year.
For Uber drivers in the UK, it's important to keep meticulous records of all your expenses, such as fuel, vehicle maintenance, and insurance, as these can be deductible. A digital accounting tool or app that can sync with your bank account is often recommended for real-time tracking.
Common tax deductions available for Uber drivers in the UK include expenses related to fuel, vehicle maintenance, insurance, and even the cost of cleaning your car. You may also deduct a portion of your mobile phone bill, as it's used for your work.
In the event of a tax audit by HMRC, we can represent you to ensure that all your filings and deductions are in order. We are well-versed in the specific tax requirements and potential audit triggers for Uber drivers in the UK.
Calculating car depreciation is crucial for Uber drivers in the UK as it can be a significant tax deduction. The most commonly used method is the "Writing Down Allowance," where you can deduct a certain percentage of the car's value from your taxable income each year.