Registered as a self-employed amazon flex driver? Read this guide to find out how amazon flex taxes work including how your driver earnings are taxed, what expenses you can claim and how tax returns work.
Table of contents
- 1. How Amazon Flex Taxes Work
- 2. What is Self-Assessment?
- 3. What is a Tax Return?
- 4. How Much Tax You Pay On Amazon Flex Earnings
- 5. Tax Deductions for Self-Employed Amazon Drivers
- 6. How to Register as a Self-Employed Amazon Flex Driver
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
1. How Amazon Flex Taxes Work
When you choose to sign up to Amazon Flex you’re treated as working for yourself rather than being employed by Amazon (and getting a payslip). Being self-employed means that you:
- Are responsible for finding your own work, Amazon is not obligated to give you work;
- Decide whether you want to accept or decline a job;
- Need to have your own vehicle, mobile phone and equipment;
- Will not receive sick pay or holiday pay;
- Make sure you have the right qualifications to operate;
- Take out your own insurance.
If you have ever received a payslip you’ll notice that deductions for income tax and national insurance are made on your behalf before you get paid. However, when you’re self-employed you are responsible for working out how much tax and national insurance you owe, paying them over to HMRC in accordance with the rules of self-assessment.
2. What is Self-Assessment?
Self-assessment is the process created by HMRC that allows anyone who receives untaxed income to declare it to the government and pay any tax due.
As a self-employed driver, everything you get paid by Amazon or anyone else you work for has no tax deducted from it. It’s your responsibility to tell HMRC about it, work out how much tax you owe and pay it over. The way you do this is by registering for self-assessment to fill in a tax return.
3. What is a Tax Return?
A tax return is a form issued by HMRC (also known as an SA100). It contains lots of different sections and boxes that you need to fill in to declare your amazon flex earnings. Once completed, HMRC will then calculate how much tax you owe ready for you to pay them.
You need to fill in your tax return by the 31 January each year summarising all your earnings for the previous tax year. The tax year runs from 6 April to 5 April each year. So a tax return due by 31 January 2023 would contain amazon flex earnings between 6 April 2021 to 5 April 2022.
4. How Much Tax You Pay On Amazon Flex Earnings
When you’re self-employed you’ll pay income tax, Class 2 and Class 4 national insurance on the profits as a driver. Profit means all your income minus expenses you can claim as a tax deduction.
Income Tax Rates for Tax Year* 2023-24
England & Wales
- 0%: £0 to £12,570 (personal allowance)
- 20%: £12,571 to £50,270 (basic rate)
- 40%: £50,271 to £100,000 (higher rate)
- 60%: £100,001 to £125,139 (higher rate + personal allowance restriction)
- 45%: Over £125,140 (additional rate)
- 0%: £0 to £12,570 (personal allowance)
- 19%: £12,571 to £14,732 (starter rate)
- 20%: £14,733 to £25,688 (basic rate)
- 21%: £25,689 to £43,662 (intermediate rate)
- 42%: £43,663 to £100,000 (higher rate)
- 63%: £100,001 to £125,140 (higher rate + personal allowance restriction)
- 47%: Over £125,141 (top rate)
* the tax year runs from 6 April to 5 April
You can read more about self-employed tax here, see examples of how it’s calculated and when you pay it, including if you’re employed and self-employed.
5. Tax Deductions for Self-Employed Amazon Drivers
Claiming for allowable business expenses is the easiest way to reduce your Amazon flex taxes when you’re self-employed. Typically, most of the things that you pay for as a driver will be tax-deductible. For example:
- Car purchase (see below)
- Car lease (see below)
- Amazon commissions and service charges
- Business mileage
- Any costs incurred as part of the Amazon application process
- Tolls and Parking charges
- Mobile phone & data
- Car cleaning and valeting
- Vehicle Insurance
- Accountant’s fees
- Bank charges of a business bank account.
There may be some expenses you pay for that you use personally and for work, such as your mobile phone. In these cases, you can only claim a portion as a business expense where you can make a clear apportionment of your usage. So, say you use your mobile phone for 60% work and 40% personal, then can claim 60% of the total bills to put against your taxes.
While most things you pay for as part of being a self-employed Amazon flex driver are tax write-offs, there are some things you may pay for that you cannot deduct against your taxes. This includes things like:
- Fines and penalties eg: parking fines
- HMRC interest and penalties
- Training and courses for new skills
- Food, except in certain circumstances
- Personal expenses
5.1 Claiming for a Car on Amazon Flex Taxes
If you are using your own car for Amazon, then you can choose to claim an amount for the number of miles you drive. You’ll need to record the number of miles you do, keep a detailed log of where you have travelled and then claim the self-employed mileage allowance per mile. The rates are currently 45p for the first 10,000 miles of driving and 25p thereafter for cars and 24p for motorbikes. If you choose to use this method then you cannot claim for the cost of your car, servicing and insurance.
If you choose to buy a vehicle for work, then you are entitled to claim the business portion of the cost against your taxes. Under HMRC rules you cannot claim the full amount of the car in one tax year. Instead, you’ll need to claim for a portion of the car cost, depending on its emissions using capital allowances at set percentages.
If you opt to use this method for your car, then you also are entitled to claim for fuel, servicing, insurance and repairs on your vehicle as tax deductible expenses.
5.2 Claiming for Car Lease Payments on Your Amazon Flex Taxes
When you lease a vehicle, you are allowed to claim the monthly cost of the lease against your taxes as well as fuel, servicing, insurance and repairs. Again, you can only claim the business portion of the car lease and expenses.
6. How to Register as a Self-Employed Amazon Flex Driver
The quickest and easiest way to register to work for yourself with HMRC is to register as self-employed. You can choose to do this once your amazon flex earnings go over £1,000 during a tax year if you like by taking advantage of the £1,000 trading income allowance.
The deadline for registering is the 5th October following the end of the tax year you started working as a driver or your earnings go over the £1,000 limit.
There are other business structures out there including a Limited Company which may offer better tax savings depending on your earnings. You can find out about the most popular UK business structures in this guide.