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Tax Advice for Self-Employed Deliveroo Riders

Deliveroo requires all their riders to be self-employed, despite recent controversy.  If self-employment is new to you, it may be difficult to know where to start and what it all means.

Here I show you how to get started as self-employed and unravel some of the confusion around taxes.

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, Deliveroo are not obligated to guarantee you with work;
  • Decide when you want to accept or decline a job;
  • Need to have your own method of transport, mobile phone and kit to make deliveries;
  • Will not receive sick pay or holiday pay, so you will go without earnings during these times;
  • Need to register as self-employed, work out your own taxes and send a tax return to HMRC.

Being self-employed doesn’t restrict you to just working as a self-employed Deliveroo Rider.  It means you can take on work elsewhere or even hold down a job while working for Deliveroo on the side.

When Do You Need to Register as a Self-Employed Deliveroo Rider

You need to register as self-employed if you earn more than £1,000 in untaxed income during a tax year. Useful if you wanted to just test out Deliveroo or just earn a small amount on the side.  This is called the HMRC Trading Allowance.

A tax year runs from 6 April to 5 April.

You need to register as self-employed by the 5th of October following the tax year you started working for Deliveroo.

So if you started working as a Deliveroo Rider on the 1 December 2018 you’ll need to register as self-employed with HMRC by 5th October 2019.

Ready to Register as Self-Employed? Here’s how you do it.

What Taxes Do Self-Employed Deliveroo Riders Pay

Self-employed Deliveroo Riders need to pay:

  • Income Tax
  • Class 2 and Class 4 National Insurance.

The amount of tax paid depends on how much money you make from Deliveroo (after deducting your Deliveroo expenses) and any other income you earn.

Want to estimate your taxes? Read this post on Self-Employment Taxes which shows you how to work out how much tax you’ll need to pay on your Deliveroo earnings.

How to Reduce Your Tax Bill as a Self-Employed Deliveroo Rider

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

So it is in your interest to make sure you claim all the expenses you can to legally reduce your tax bill.

Allowable Expenses for Self-Employed Deliveroo Riders

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

Most things you pay for working as a Deliveroo Rider will be allowable or “tax deductible”.

Here are some common examples of tax allowable expenses for self-employed Deliveroo Riders:

  • Deliveroo commissions and service charges;
  • Business travel & mileage;
  • Parking charges (fines are not allowed);
  • Bike maintenance such as brake pads, tyre replacement;
  • Kit, thermal bags
  • Mobile phone, phone holder & data allowance;
  • Insurance;
  • Accountants fees;
  • Bank charges for a business bank account.

There may be expenses 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 Deliveroo Riders

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

Here are some common examples of disallowable expenses for self-employed Deliveroo Riders:

  • Parking fines and penalties;
  • Self-assessment penalties and interest;
  • Lunch, unless in special circumstances.

Tax Relief and Allowances for Self-Employed Deliveroo Riders

Taking advantage of tax reliefs and allowances is another way to reduce your tax bill.

Typical tax reliefs and allowances that self-employed Deliveroo Riders are entitled to include:

Looking for more ways to Reduce Your Tax Bill? Read this post

What is a Self-Assessment Tax Return Form

You need to declare all your earnings from Deliveroo, as well as any other forms of income you have on a self-assessment tax return.

This is the official form required by HMRC and it’s due by 31 January each year.  The penalties for missing this deadline start at £100.

A self-assessment tax return contains:

  • Your personal details;
  • A summary of all your income not just as a self-employed Deliveroo Rider (like bank interest, employment income and rental income);
  • Details of allowable expenses you wish to claim against your taxes;
  • A tax calculation;
  • How much tax you need to pay.

One tax return form covers one tax year.

So a tax return for 2018/2019 covers earnings from 6 April 2018 to 5 April 2019 and needs to be filed by 31 January 2020.

When is Your Tax Due?

Any tax you need to pay is due by 31 January, along with your self-assessment tax return.

Payments on Account

In addition to your tax payment, you may need to make a contribution of 50% towards your next year tax bill.  This is called a payment on account and can come as a shock to some self-employed people.

Bookkeeping and Record Keeping for Self-Employed Deliveroo Riders

One of the keys to reducing your tax bill is to stay on top of your bookkeeping and tracking all your expenses.

You’ll also need to make sure you keep all your receipts support all the expenses you want to claim, as well as details of what you have been paid.

The simplest way to do this is to:

  1. Open up a separate bank account for yourself and set this to send/receive any payments. That way when tax time comes you has a record of everything that has happened.  
  2. Save all your receipts and reports using a bookkeeping app.

Quickbooks is a popular option with self-employed Deliveroo Riders since you can photograph and store your expenses on the go, as well as using the app to automatically track your business mileage.

Updated 26 March 2019

Anita Forrest
About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - a UK small business finance blog where she shares help and advice with the self-employed community to make topics like registering a business, bookkeeping and taxes easy to understand.

3 thoughts on “Tax Advice for Self-Employed Deliveroo Riders”

  1. Hi,
    If I use a substitute rider, can I offset that as an expense? I.e. not pay tax on the money that the substitute earns?

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