What expenses can be declared as a private hire driver?
If you are a private hire taxi driver or are thinking about becoming one, it’s really useful to know what expenses you will be able to declare and not declare when completing your self-assessment tax form. This is because you will want to ensure you’re making the most of any tax breaks available to you.
On the flip side, you will also want to make sure that you do not incur any penalty fines from HMRC for incorrectly declaring your expenses.
Below we will explain what expenses you can declare as a private hire taxi driver as well as giving you a quick introduction on how to register for self-assessment.
Costs associated with running and maintaining your vehicle
The first thing to know is that you will be able to claim for any type of expense that is linked to operating your vehicle, as a private hire taxi driver. This can include things like the cost of fuel whether it’s petrol or diesel, along with costs associated with servicing, repairing and maintaining your taxi.
Furthermore, private hire insurance will be another big business cost that you must factor into your business expenses. You will also be able to claim the fee for your MOT test along with your annual road tax that you may be required to pay, though this will depend on the type of car you have. Maintenance can also cover the cost of cleaning and washing your taxi. After all, your vehicle will need to be presentable at all times for the line of work you are involved in.
Costs linked to your actual taxi
As a private hire driver, you can also include the costs that are linked to your actual taxi. For example, if you purchased your taxi with a personal loan, bank loan or on a credit card, you will have the opportunity to state the interest amount on this loan as an expense.
If you have been subject to any registration fees, these can also be claimed against. For example, you may be required to pay license fees. Drivers working in London will likely have to account for the cost of their PCO license. Also, it’s worth noting that AA/RAC breakdown cover memberships are both eligible expenses that can be claimed against too. If you don’t have standard taxi cover, not to worry as Uber car insurance can also be added as an expense.
Office expenses and administration costs
If you have your own taxi business that is run from an office, these admin expenses can also be counted. This also applies if you are using your home as an office too. You will have the opportunity to claim a percentage of this as rent. There are a number of online calculators to help you work out how much you are eligible to declare.
Other admin and office related expenses that can be included are accountancy fees, marketing costs, and mobile phone use for business purposes. Marketing can incorporate a range of areas such as business cards, online advertising and website design too.
Other expenses to consider
You are also able to claim for things like parking fees and toll costs. However, you will not be able to make a claim for any parking tickets on your annual self-assessment form. If you hire any equipment such as a radio, this can also be included.
Feasibly, you should now have a much better understanding about what expenses you can and cannot include on your self-assessment form as a private hire taxi driver. It’s highly recommended that you include any eligible expenses to reduce your yearly tax payments.
Since last year, tax penalties were increased. This makes it even more important that your tax return is completed in a timely manner. You will want to make certain that you get it right on the first time. After all, the last thing you want to do is to have to pay any hard-earned cash towards some hefty fines.
Registering with HM Revenue & Customs
If you are required to complete a tax return, you will need to start by informing HM Revenue & Customs (HMRC). There are two separate forms that can be used. Although, as a private hire taxi driver, you will most likely be required to select the one for those who are newly self-employed. Fortunately, most HMRC registrations can now be completed online through the government website.
These forms will ask you to enter your personal information such as full name, date of birth and address etc. You will also need to enter in your National Insurance (NI) number and provide up-to-date contact information such as your telephone number and email address.
Once you have done this, HMRC will send you a confirmation of your registration and provide you with your unique taxpayer’s reference (UTR) number.
Tax return basics
Your self-assessment tax return should disclose any taxable income for the relevant tax year. The new tax year starts on 6 April and ends on the following 5 April each year. If you do other work as a taxi driver such as food delivery, this will also need to be included. Thankfully, you can also include food delivery insurance as an expense too.
Submitting your HMRC tax return
At the end of each tax year, you must submit your tax return to HMRC. If you fail to do this on time, you will likely receive a penalty notice requiring you to pay a fine.
Paying any tax due
You must pay any tax due on or by 31st January following the end of the tax year. Even if you have already paid tax on any income, this must still be declared on your tax return. As expected, the tax that you have already paid at source will be deducted before you arrive at the final tax bill, for example, income previously taxed through your employment.
If you’re just starting out, it may be a lot easier to use a simple spreadsheet to keep track of your income and expenses on a weekly or monthly basis. There are also a number of free templates online to help you with this. If you prefer, you can always hire an accountant to manage this on your behalf.
To conclude, it can be quite confusing when you are completing your first self-assessment tax return, especially when you’re factoring in all of your private hire taxi related expenses. For this reason, it may make sense to use an accountancy service initially as it can be a lengthy process for beginners. As you get a better understanding of the economics involved, you can always manage your own tax returns in the years to come. Helpfully, the UK government’s website is pretty straightforward to use and does explain things quite well to an extent.
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