Income Tax Returns for Taxi & Private Hire

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INCOME TAX RETURNS FOR
TAXI & PRIVATE HIRE DRIVERS

Starting out as a taxi driver and completing your first tax return can be pretty daunting, and we can offer you a free 20-minute consultation on best practices and what you need to do to get on the road of being a self-employed taxi driver. Our services cover the full spectrum, from registration with HMRC through to organizing your accounts data, calculating your tax and NI liability, and submitting it through to HMRC.

Completing your tax return can be a lengthy and complex process; at Taxfile we have tax advisors and accountants that could do this for you. We ensure that you comply with legislations and HMRC guidance. Furthermore, we should be able to save you tax, ensure that everything is submitted and paid on time, avoiding any interests or penalties.

At Taxfile we have a team of tax agents with historical roots in calculating & submitting tax returns for black cab taxi drivers. With expert knowledge of tax for the self-employed in the UK, we have helped clients register as a sole-trader with HMRC and calculated taxes for hundreds of taxi drivers throughout the 20 years of Taxfile’s history.

As a self-employed professional, you are responsible for reporting your income to HMRC under self assessment by submitting a personal Tax Return by 31 January each year detailing your income so that your income tax and Class 2 & Class 4 National Insurance can be calculated and submitted to HMRC for payments to then be made.

Your income needs to be clearly and concisely logged, and now with the more common payment methods being credit/debit cards over (traditionally) cash it has become easier to have a log of the income through your bank account, however all cash income including cash tips need to be included as your income.

More complex and challenging, is calculating all the eligible expenses for a Taxi Driver.

Below are listed some common expenses that can be claimed by taxi and private hire drivers:

  • Petrol or diesel costs
  • Repairs, servicing and running the taxi
  • The costs of your annual road tax and your MOT test
  • The cost of washing or cleaning your own taxi
  • Interest on any bank or personal loans taken out to purchase your taxi
  • Your licence and any other registration fees
  • The cost of running your office (if you have one) or use of your home
  • Vehicle insurance
  • AA/RAC membership
  • Radio hire
  • Accountancy fees
  • Advertising
  • Phone usage for business
  • Parking & toll fees
  • Credit or commission charges

Determining the value of the vehicle being used as capital allowance is a pitfall for many people when filing their tax returns. The amount being claimed will be dependent on the official emissions of the vehicle and the split between business and personal use of the vehicle. In 2019 the capital allowance percentages based on emissions are:

Cars bought from April 2018:

up to 50 g/km – 100% first year allowance
51g/km-110g/km – 18% capital allowance
111g/km or more – 6% capital allowance

Black Cabs (aka Hackney Carriages) are eligible for the 100% Annual Investment Allowance.

Some drivers prefer to simplify their vehicle’s running cost by using HMRC’s Fixed Scale Mileage Rate (2019: 45p per mile for the first 10,000 and 25p thereafter). This includes a depreciation allowance (capital allowance) for the vehicle but does not include interest on any loan to purchases the vehicle. This can be claimed in addition to the mileage allowance. Using the Fixed Scale Mileage Rate can be beneficial to drivers doing long-haul journeys and not necessarily beneficial to drivers with passengers in and around the London area.

Other Expenses to consider:

Use of home

If you work from home, you will be able to put through a small portion of the running costs of your home dependent on the amount of hours spent working, within that you can include; gas, electricity, telephone, and broadband costs.

Pre-owned assets

If you transfer a personal, pre-owned asset to the business, you may be able to obtain tax relief for it.

Family wages

Family wages has long been an area of abuse by individuals, so the rules regarding wages paid to family members have tightened. You may still pay family members wages, but they must actually be doing some work for the business and their wages be physically paid – i.e. HMRC will want to see a bank payment or receipt of cash paid to them. Furthermore, you should still consider national minimum wage rules, young workers regulations, and tax and national insurance implications etc.

As a private taxi driver, it is important to know what expenses you can and cannot declare when filing in your Self Assessment form. After all, you want to make sure you are making the most of all tax breaks that are available to you, yet the last thing you want is to have a fine from HMRC for declaring your expenses incorrectly.

At Taxfile you will have a personal tax agent who will be solely responsible for your tax return and will work with you to ensure we all have the information needed. They will go through your income as well as your expenditure, and ensure you are claiming all the allowable tax expenses.

Once we have all the information we need, we will complete your tax return on your behalf and submit the forms online to the HMRC.

Any submissions done by us are insured and if for any reason you are investigated by HMRC, Taxfile will liaise with HMRC on your behalf at no extra cost to you.

OUR EXPERT ADVISORS

Speak to our expert advisors for taxi & private hire drivers by calling 020 8761 8000.

Faiz

Tax Agent

Ewelina

Tax Agent

Julie

Tax Agent