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Taxes for Self-Employed Uber Drivers

Taxes for Self-employed Uber Drivers can be difficult to understand, especially if self-employment is new to you.

Uber drivers are responsible for handling their own taxes and declaring their earnings to HMRC.

Here I show you how to:

  • Register as a self-employed Uber Driver;
  • When you need to register
  • How to work out how much tax you need to pay;
  • How to legally reduce your tax bill;
  • Keep your records in order.
  • get started as self-employed, 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, Uber is not obligated to guarantee you with work;
  • Decide whether you want to accept or decline a job;
  • Need to have your own method of transport, mobile phone and other equipment you need to be an Uber driver;
  • Won’t 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 taxe and send a tax return to HMRC.

Being self-employed Uber Driver means you can take on work elsewhere or even hold down a full-time job while working for Uber on the side.

When Should You Register as a Self-Employed Uber Driver

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

If you earn less than £1,000 you may be able to use the HMRC Trading Allowance to avoid registering.

If you need to register for taxes as a self-employed Uber Driver then you need to do it by the 5th October following the tax year you started working for Uber.

A tax year runs from 6 April to 5 April each year

So if you started working for Uber in November 2018 you’ll need to register as self-employed by the 5th October 2019.

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

What Taxes Do Self-Employed Uber Drivers Pay

Self-employed Uber Drivers need to pay the following taxes:

  • Income tax
  • Class 2 and class 4 National Insurance

The amount of each you pay, if any depends on:

  • Your Uber expenses;
  • How much you make from Uber;
  • Your other income like employment, rental or bank interest;
  • Any tax reliefs and allowances you are entitled to.

Learn more about taxes when you’re self-employed here.

Tax Allowable Expenses for Uber Drivers

When you are self-employed you can deduct expenses from your income before working out how much tax and national insurance you need to pay. 

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).

Most of your Uber expenses will be tax allowable.

Here are some examples of typical tax allowable expenses for Uber Drivers:

  • Car or Mileage;
  • Car Lease Payments;
  • Car cleaning;
  • Any costs incurred as part of the Uber application process such as Private Hire Vehicle (PHV);
  • Vehicle and public liability insurance;
  • Tolls and parking charges (but not fines);
  • Water & treats you provide to your riders;
  • The business element of your mobile phone, either note down your spending or estimate the percentage business use for example 80% business and 20% personal);
  • Uber fees and deductions;
  • Accountants fees;
  • Bank charges for a business bank account.

How Uber Drivers Claim for their Car Against their Taxes

The way an Uber Driver claims for their car against their taxes depends on how they own their car.

Claim a Mileage Allowance for using Your Personal Car

If you use your own car then you can choose to claim an amount for the number of miles you drive your passengers.

You’ll need to record the miles you do, keeping a detailed log of where you have travelled. You can then claim the HMRC Mileage Allowance Payments Record -currently 45p for the first 10,000 miles of driving and 25p thereafter.

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

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

Buy a Car

If you choose to purchase a car then you are entitled to tax relief based on the amount you paid.  

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.

Lease a Car

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

In this case, you would be allowed to deduct the monthly cost of the car lease against your taxes.

You can also deduct for fuel, servicing, insurance and repairs.

Disallowable Expenses for Self-Employed Uber Drivers

There are certain expenses that HMRC do not allow self-employed Uber drivers to claim against their taxes. These include:

  • Fines and penalties;
  • Lunches, except in certain circumstances;
  • Clothing (unless branded);
  • HMRC self-assessment penalties and interest.

When Are Your Taxes Due

Taxes and national insurance are due for payment by the 31 January each year, along with a self-assessment tax return.

You may also need to pay an additional amount called a Payment on Account which is a contribution towards your next tax bill (due by 31 January and 31 July).

Bookkeeping and Record-Keeping for Self-Employed Uber Drivers

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.

Updated 27 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.