Tax Advice for Amazon Flex Drivers

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Here some tax advice for self-employed Amazon Flex Drivers to help unravel some of the confusion around taxes and get you prepped for doing your first tax return.

What is Self-Employment

Self-employment means that you work for yourself rather than for someone else.

This means you:

  • Are responsible for finding your own work, Amazon are not obligated to give you work;
  • Decide when you want to accept or decline a job;
  • Need to have your own method of transport, mobile phone and equipment;
  • Will not receive sick pay or holiday pay, so you will go without earnings during these times;
  • Make sure you have the right qualifications to operate;
  • Take out your own insurance;
  • Need to register as self employed, work out your own taxes and send a tax return to HMRC.

You are not restricted to just being self employed either.  

You can even hold down a full-time job while working as a Self Employed Amazon Flex Driver on the side.

Ready to Register as Self-Employed? Check out my free 10 Step Going Self-Employed Guide.

What Taxes Do You Pay as a Self-Employed Amazon Flex Driver

You will need to pay Income Tax and 2 types of National Insurance (Class 2 and Class 4) on your earnings.

Earnings mean all the money you are paid as a self-employed Amazon Flex Driver less expenses and other allowances you are entitled to.

There is often a misunderstanding amongst self-employed Amazon Flex Drivers that their earnings are tax-free so they can work without any tax obligations.  

This is not true.

All self-employed Amazon Flex Drivers must register with HMRC and declare their earnings.

Earnings may be tax free because you earn below the personal allowance, however you still need to declare everything to HMRC using a self assessment tax return.

There is one exception however.  

You only need to register and pay tax on your self employment income if you earn more than £1,000 in a tax year (6 April to 5 April).  If you make less than £1,000 as a Amazon Flex Driver then it’s tax free and you don’t need to declare it. Useful if you wanted to just test out life as an Amazon Flex Driver or just earn a small amount on the side.  

This perk is called the HMRC Trading Allowance.

How to Register as a Self-Employed Amazon Flex Driver

If you make more than £1,000 as a Self Employed Amazon Flex Driver or you intend to build up a steady self-employment income,  with Amazon Flex a regular part of that, then you should register with HMRC.

When to Register as a Self Employed Amazon Flex Driver

Officially you should register by 5th October in the second tax year of being an Amazon Flex Driver.

A tax year runs from 6 April to 5 April.

So if you became a self-employed Amazon Flex Driver on 1 April 2018 then you would need to register by 5th October 2018.

How to Register as a Self Employed Amazon Flex Driver

You can register as self-employed online.  It’s fairly easy to do yourself and I’ve put together a video guide here.

Allowable Expenses for Self-Employed Amazon Flex Drivers

One of the perks of being self employed is that you get to set off costs against your income.  This reduces the amount of tax you have to pay.

There are rules set out by HMRC which expenses you can claim for (allowable expenses) and those you can’t (disallowable expenses).A

In the main anything you need to pay for in relation to working as a Amazon Flex Driver will be allowable or “tax deductible”.  

Mileage

If you are just starting out you may opt to use your own car, in which case you can claim for the number of miles you drive.

Record your miles to and from your destination since you can claim 45p for the first 10,000 miles of driving and 25p thereafter.

If you choose to claim for mileage you cannot claim for the cost of your car, servicing and insurance.

Learn more: Self-Employed Mileage Allowance

Car Purchase

If you choose to purchase a car to use as your role of an Amazon Flex Driver, then you are entitled to tax relief based on the amount you paid for the car.  However you cannot claim for the full amount of the car in one tax year and instead you may have to claim for a portion of the car cost 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

If you opt to use this method for your car, then you are entitled to claim for fuel, servicing, insurance and repairs on your vehicle as tax deductible expenses.

Car Lease Payments

Leasing a car is a another option for owning a car as an Amazon Flex driver.  

In this case, you would be allowed to claim the monthly cost of the lease against tax, as well as fuel, servicing, insurance and repairs.

Here are some other allowable expenses you may have to pay for that can be deduct against your income:

  • Amazon commissions and service charges;
  • Any costs incurred as part of the Amazon application process;
  • Tolls and Parking charges;
  • Mobile phone & data;
  • Car cleaning and valeting;
  • Vehicle Insurance;
  • Accountants fees;
  • Bank charges of a business bank account.

There may be expenses that you pay for that you use personally, like your mobile phone.  

In these cases you can only claim a portion as an allowable expense.

So if you use your mobile phone for 60% work and 40% personal, then you take 60% of the total costs to put against your taxes.

Disallowable expenses for self-employed Amazon Flex Drivers

After years of people pushing the boundaries and claiming for some questionable expenses, HMRC have a growing list of expenses that are disallowable.

Here are some common examples of disallowable expenses for Self Employed Amazon Flex Drivers:

  • Fines and penalties;
  • Personal clothing;
  • Lunch, unless in special circumstances;

Bookkeeping and Record-Keeping

Bookkeeping is part of being self-employed. And while it can feel like a burden there are a couple of things you can do to make it easier.

You’ll need to keep receipts for all your expenses and details of your Uber income.

Start by:

  1. Opening up a separate bank account and set this to send/receive all your business payments.
  2. Setting up a cloud bookkeeping app like Quickbooks to track your mileage and photograph all your receipts on the move.

These two simple changes will mean you’ll never miss out on an expense that will reduce your tax bill.

The Quickbooks Self-Employed app records your mileage, tracking you as you drive around so this can really simplify things.

Overview of Quickbooks Self-Employed

Updated 08 April 2019

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