There are over 360,000 taxi, private hire, and Uber drivers across the UK. Most of these drivers are considered self-employed for tax purposes, which means they’re responsible for:
Keeping financial records, Producing accounts and Registering for Self Assessment with HMRC
This guide covers the essentials of tax, bookkeeping, and allowable expenses for self-employed taxi and Uber drivers—plus how to stay compliant and avoid overpaying.
What Taxes Do Taxi and Uber Drivers Pay?
If you’re a self-employed driver, you’re responsible for:
Income Tax on your taxable profits
National Insurance Contributions (NICs) to qualify for State Pension and other benefits
VAT, but only if your annual turnover exceeds £85,000
Most Uber drivers operate as sole traders, though some may choose to set up a limited company. As a sole trader, you pay tax and NICs at the same rates as other self-employed individuals, though NIC rates may differ slightly.
Do Taxi Drivers Need to Register for VAT?
Only if your total turnover exceeds £85,000 in a 12-month period. If it does, you must register for VAT.
What Expenses Can Taxi and Uber Drivers Claim?
Claiming allowable expenses is key to reducing your taxable profits. But remember, if you use your vehicle for both business and personal use (e.g., as a family car), you’ll need to apportion the costs accordingly.
Here are some common expenses you can claim:
Fuel (petrol, diesel, or electric)
Vehicle maintenance, servicing, MOTs, and repairs
Road tax
Car washing/cleaning
Business-related licence and registration fees
Insurance and breakdown cover (AA, RAC, etc.)
Business-related mobile phone or radio costs
Loan interest on a business vehicle
Home office costs (if applicable)
Parking fees, tolls, and congestion charges
Advertising and promotional materials
First aid kits or taxi modifications
Be sure to keep receipts and accurate records for all expenses.
Can Taxi Drivers Claim Mileage?
Yes. There are two methods:
Simplified Mileage Method:
45p per mile for the first 10,000 miles
25p per mile thereafter
Quick and easy, but you can’t claim capital allowances if you choose this method
Actual Expenses Method:
Track every cost related to your vehicle
More detailed, but potentially more tax-efficient
Great if you use accounting software or work with an accountant
Once you choose a method, you must stick with it for that vehicle.
Can Taxi Drivers Claim Capital Allowance?
Yes. If you purchase a vehicle for business use:
You can’t claim Annual Investment Allowance (AIA) for regular taxis or Ubers
You can claim Writing Down Allowance (WDA) at 18% per year
Hackney carriages (e.g. London black cabs) do qualify for full AIA
How Should Taxi Drivers Record Expenses?
You must keep clear records of:
Business income
All allowable expenses
Any personal use of your vehicle
You can do this manually, use cloud accounting software, or work with a tax advisor who understands the taxi trade—like ANFA Accountants.
How to Register and File Taxes
Register as self-employed via HMRC’s online portal
You’ll receive a Unique Taxpayer Reference (UTR) and login credentials by post
File your Self Assessment tax return online annually
Deadlines:
Submit your Self Assessment by 31 January following the end of the tax year
Pay any tax due by the same date
Example: For the 2024–25 tax year, the deadline is 31 January 2026
Are Taxi Drivers Independent Contractors?
It depends. If you work independently and control how you operate, you’re usually considered self-employed. However, if you work exclusively for a company (e.g., a taxi firm), your employment status might differ.
Are Uber Drivers Self-Employed?
The UK Supreme Court ruled that Uber drivers are classified as “workers”—entitled to holiday pay and minimum wage. But for tax purposes, Uber drivers are still treated as self-employed and must file a Self Assessment tax return each year.
Need Help?
Working with ANFA Accountants ensures you:
Stay compliant with HMRC
Maximise your allowable deductions
Avoid paying more tax than necessary
We specialise in helping taxi and Uber drivers stay on top of their accounts. Get in touch today for tailored advice and support.