Are you a self-employed taxi driver?
If so, you will have to complete a self assessment tax return every year to ensure you pay the appropriate tax. As well as keeping good records of your earnings, it is also vital you keep track of your business expenses. Our guide will help you work out what you need to declare to HMRC.
If you are a self-employed taxi driver it is vitally important that you keep good records of all your earnings. Make sure that you keep an extensive, organised record of all your fares and tips, as HMRC may need to check the amount that you declare on your self-assessment tax return.
It is worth having a filing system at your home in order that you can keep your income records in good order.
All self-employed people are allowed to claim allowable tax expenses. A self-employed butcher can claim the cost of renting a shop or buying in his meat, whilst a self-employed baker can claim the costs of their raw materials and premises.
A self-employed taxi driver is no exception. Many of the expenses you incur in running your business can be deducted from your income to determine the ‘net’ profit of your taxi business.
Common examples of tax expenses that taxi drivers are permitted to claim include:
- Petrol or diesel costs
- The costs of servicing and repairing your taxi
- Interest on any bank or personal loans taken out to buy your taxi cab
- The costs of your annual road tax and your MOT test
- The costs of washing and cleaning your taxi cab
- Your license (and any other applicable registration fees)
- The costs of running your office (if you have one) including the payroll costs of any administrative or support staff that you employ
Don’t forget that, as with any self-employed business, you can only claim the expenses that are ‘wholly to do with your business’. So, if you use your taxi 25% of the time as your private vehicle, you cannot claim for the petrol or cleaning for this portion.
Claiming a mileage allowance
If you are a self-employed person and you use your own vehicle for business usage, you can claim a mileage allowance in accordance with a standard HMRC scale. However, this is not possible as a taxi-driver.
This is because you are already factoring these mileage costs – repairs, tax, petrol etc – into your tax allowances.