“Call Uber” isn’t that what comes out of our mouth nowadays instead of saying, “call a taxi?” Uber gained the trust and love of its customers to such a far extent that a taxi means an Uber now.

The Uber community is spread all over the globe with around 40,000 drivers alone in the UK. Due to the extra income that one can earn through Uber, everyone with a car wants to join the Uber army today. If you too are planning to put your vehicle on the road, then keep in mind that you won’t be joining as an Uber employee there, instead, will be an Uber driver-partner, an independent contractor for which you will be bound to pay taxes. Surprised? Well, yes, being a self-employed Uber taxi driver in the UK is similar to a self-employed businessman who is obliged to comply with HMRC’s tax rules. Self employment taxes can significantly impact your income, so it’s crucial to understand and manage them effectively.

In short, if you already are a star driver or about to set your foot in Uber, there are taxes you need to do and maintain about which we are going to guide here.

Start by registering yourself with HMRC for self-assessment and Class 2 & 4 National Insurance as soon as you start driving as an Uber driver because as per the norms of HMRC, self-employed professionals must report their income to under self-assessment by submitting a personal Tax Return by 31 January each year.

Upon registering you will get a UTR number – a 10-digit Unique Taxpayer Reference number which is compulsory for every UK taxpayer because HMRC processes tax returns efficiently and accurately using the individual’s UTR number. It allows them to ensure that everyone is paying taxes on time and are receiving cash back they are entitled to.

Uber drivers need to submit their tax returns by 31st of January if submitting online or by 31st October if completing a paper return. For ex: tax return for financial year 6 April 2018 – 5 April 2019 needs to be submitted by 31st January 2020 if submitting online or 31st October is a paper return is being filed

Uber does not withhold taxes from your income and you don’t have to pay taxes on all your income as well. Make sure to keep records of everything from the beginning of your Uber self-employment to particularly expenses as they will help in tax deduction and claims.

Since most of the UK Uber drivers are sole traders, the tax rates as same as regularly-employed people. Check out the HMRC tax rates here. While the rates for National Insurance are different. For 2018/19, Class 2 NIC is £2.85 a week if profits are at least £6,205 and Class 4 NIC is 9% on profits between £8,424 – £46,350 and 2% on profits over £46,350, both of which are to be paid by the self-employed.

Coming to the tax deductions, there is quite a list. To lessen your load, there are certain business expenses that you can claim like the following;

Car-related expenses:

• Car cost based on the amount you paid. You cannot claim for the full amount of it in one tax year. A portion of the car cost can be claimed depending on its emissions using Capital Allowances:
• up to 50 g/km – 100% first-year allowance
• 51g/km-110g/km – 18% capital allowances
• 111g/km or more – 8% capital allowances
• Fuel, servicing, insurance and repairs
• Billing charges of your carrier
• Car cleaning and valeting
• Vehicle Insurance and Public Liability Insurance
• Car loan interest
• Floor mats
• Car tool kit
• First aid kit
• Tire inflator and pressure gauge
• Portable battery jump pack
• Flashlights and flares

Ride-related expenses:

• The cost of the phone if only for business use, chargers, mounts, and cradles
• Monthly phone service bills (business use)
• Bottled water, snacks and amenities for customers
• Electronic toll responder and tolls paid
• Roadside assistance plans
• Business taxes and licenses
• City and airport fees
• Freeway, highway, and bridge tolls
• Electronic toll transponder
• Roadside assistance plans
• Office supplies
• Uber commissions and service charges
• Bank charges of a business bank account.
• Private car hire licence fee
• Uber’s cut of your earnings
• Uber’s cut of your earnings
• The cost of any training

Mileage-related expenses

The miles you drive to pick up a passenger after receiving a ride request to the extra miles you drive to get to a more central location to await your next ride request can be claimed only if you have the records of all. The miles to home are not deductible as they are considered as commuting miles. For the first 10,000 miles of driving you can claim 45p and 25p thereafter. However, if you choose to claim for mileage you cannot claim for the cost of your car, servicing and insurance.

Conclusion

Driving for Uber can be profitable and exciting but its taxes can make you go round and round in search of a way out. For which, seeking the help of tax experts may save you more. For the best tax advice or for HMRC related filings, registrations or submissions, the team of Target Accounting is the best you can get in the UK.

Frequently Asked Questions

Do I need to register for VAT as a UK Uber driver?

As a UK Uber driver, you are required to register for VAT if your annual turnover exceeds the current threshold set by HMRC. It is important to monitor your income regularly to determine if you need to register for VAT.

How should I keep track of my income and expenses as a UK Uber driver?

It is recommended to maintain detailed records of your income and expenses as a UK Uber driver. You can use accounting software or apps to track your earnings, expenses, mileage, and other relevant financial information.

What expenses can I claim as a UK Uber driver for tax purposes?

As a UK Uber driver, you can claim expenses such as fuel, vehicle insurance, maintenance and repairs, licensing fees, phone bills, and other costs directly related to your Uber business. It is important to keep receipts and records to support your expense claims.

How do I report my income as a UK Uber driver for tax purposes?

You are required to report your income as a UK Uber driver on your Self Assessment tax return. Make sure to accurately declare your earnings, expenses, and any other sources of income to HMRC. Consider seeking advice from a tax professional to ensure compliance with tax regulations.

Are there any tax implications for UK Uber drivers operating part-time?

Whether you are a full-time or part-time UK Uber driver, you are still obligated to report your income and pay taxes on your earnings. It is important to understand the tax implications of your Uber business and fulfil your tax obligations accordingly.