If you're an Uber driver in the UK, you might be wondering: do Uber drivers need an accountant? The short answer is no, you are not legally required to hire an accountant. But let's dig a little deeper into why having one could make a big difference in your driving gig.
Do Uber Drivers Need to Pay Tax? A Guide to Your Tax Obligations
Uber drivers are considered self-employed. That means you've got to register for self-assessment and file a tax return with HMRC every year. Unlike employees who get tax deducted automatically from wages or pensions, as a self-employed Uber driver, you'll need to keep records and report your income. If you earn more than £1,000 from driving or any other self-employed work, you'll need to do this. So, yes, it gets a bit complicated—and that’s where a good accountant comes in.
How do Uber drivers Register for Self-Assessment with HMRC
Registering for self-assessment can feel daunting, but here’s a step-by-step guide to make the process clearer:
Create a Government Gateway Account: Go to the HMRC website and create a Government Gateway account. This is your portal to manage your taxes online.
Register for Self-Assessment: Use your Government Gateway account to register as self-employed for self-assessment. You’ll need to provide personal information like your National Insurance number and contact details.
Receive Your UTR Number: After registering, HMRC will send you a Unique Taxpayer Reference (UTR) number within 10 days (or 21 days if you’re abroad). Keep this safe—you’ll need it to file your tax returns.
Activate Your Self-Assessment Account: Once you receive your UTR, you need to activate your self-assessment account. Log in to your Government Gateway account, use the activation code sent by HMRC, and complete the setup.
File Your Tax Return: Once registered, you’ll be able to file your self-assessment tax return online each year. Remember, the deadline for registering is 5th October in your second tax year.
If you find this process overwhelming, Griffith Accountants can assist you every step of the way.
Do I Need to Pay Income Tax as an Uber Driver?
Most likely, yes. You have a £1,000 tax-free allowance on self-employment income, but if you make more than that, you'll need to register for self-assessment, report your income, and pay tax on the profit you make. You’ll also have to manage your National Insurance Contributions (NICs), which can be a bit of a minefield if you're unfamiliar with the rules. An accountant can help make sure you don’t miss any deadlines, minimise your tax bill, and stay out of trouble with HMRC.
Should Uber Drivers Operate as a Sole Trader or Limited Company?
Most Uber drivers find that being a sole trader is the simplest and cheapest way to go. A limited company involves more paperwork and compliance—as a sole trader, your responsibilities are reduced. This blog focuses on Uber drivers who operate as sole traders.
How to Report Your Income to HMRC as an Uber Driver
You need to register for self-assessment by 5th October in your second tax year. So, if you start driving in August 2023, you’ll need to register with HMRC before 5th October 2024. Keep records of all your expenses and any other income from other sources—everything needs to go on that tax return.
Keeping records isn’t just a good idea; it's vital. You’ll need receipts and invoices for any expenses you plan to claim. A bit overwhelming? Griffith Accountants can help you keep everything in order, saving you time and stress.
How to File Your Tax Return as an Uber Driver
You can file your tax return either on paper or online, but let’s be real—filing online is usually quicker and means you get an extra 3 months to submit. If you’re struggling, we recommend having a qualified accountant, like Griffith Accountants, do it for you. We make sure everything’s accurate and you’re not overpaying on tax.
How Much Tax Will I Pay as an Uber Driver?
Check out this table to help you understand how much tax you might need to pay:
Band | Taxable Income | Tax Rate |
Personal Allowance | Up to £12,570 | 0% |
Basic Rate | £12,571 to £50,270 | 20% |
Higher Rate | £50,271 to £125,140 | 40% |
Additional Rate | Over £125,140 | 45% |
National Insurance Contributions (NICs)
As a sole trader, you need to pay National Insurance based on your profits. If you’re earning over £6,725 annually, Class 2 contributions are automatic to protect your record. Above £12,570 profits, you’ll need to pay Class 4 contributions:
6% on profits between £12,570 and £50,270
2% on profits above £50,270
What Expenses Can I Claim as an Uber Driver?
To keep your tax bill as low as possible, you’ll want to claim every allowable business expense you can. This includes:
Car-related expenses like cleaning, insurance, fuel, maintenance, breakdown cover, road tax, and MOT costs.
Other expenses, including parking fees, tolls, congestion charges, and any commissions or costs charged by Uber.
Ride-related expenses, such as your private hire license fee, training costs, and phone costs.
Keeping records of these costs is crucial—and having Griffith Accountants on your side can ensure you claim everything you’re entitled to.
Should Uber Drivers Claim Capital Allowances for Car Purchases?
If you buy a car for Uber driving, you may be eligible for capital allowances. These let you deduct some or all of the vehicle cost from your profit before paying tax, reducing your tax bill. You can claim writing down allowances or 100% first year allowance if it’s a zero-emissions car. This might sound a bit technical, but again—this is where an accountant becomes really helpful.
Can Uber Drivers Lease a Car?
Yes, you can also lease a car for Uber driving, and you can claim the monthly lease cost against your tax bill. However, if you use it personally, you’ll need to calculate what proportion of the lease is for business use.
How Can Uber Drivers Claim Mileage Allowance?
If you’re using your personal car for Uber, you can also claim mileage allowance. This rate is 45p per mile for the first 10,000 miles, then 25p per mile after that. You’ll need to keep accurate mileage records to support your claim.
Key Tax Filing Deadlines for Uber Drivers
The UK tax year starts on 6th April and ends on 5th April the following year. Here are the key dates you need to know:
5th October: Deadline to register for self-assessment in your second tax year.
31st January: Deadline to file your online tax return and pay any tax owed for the previous tax year.
31st January: First payment on account towards your upcoming tax bill.
31st July: Second payment on account towards your upcoming tax bill.
It’s important to stick to these deadlines to avoid penalties. Griffith Accountants can help ensure you never miss a date.
Does Uber Report My Income to HMRC?
Yes, from January 2024, Uber is legally required to report driver income to HMRC. There’s no hiding, and if you fail to register and submit your tax return, you could face heavy penalties. The best way to avoid fines is to stay on top of things—something that Griffith Accountants is here to help with.
FAQs About Accounting for Uber Drivers
Do I have to keep all receipts?
Yes, you need to keep all your receipts and invoices. If HMRC wants proof of your claims, you’ll need these.
How do I know if my expenses are deductible?
Generally, if the expense is necessary for running your business, it’s deductible. Things like fuel, vehicle maintenance, phone bills used for Uber, and road tax are typically all allowable expenses.
Can Griffith Accountants help me file my tax return?
Absolutely. We’re experienced in working with gig economy drivers like Uber drivers. We’ll make sure you don’t miss deadlines, claim all your expenses, and keep everything in order.
Why Should Uber Drivers Consider an Accountant?
Being an Uber driver isn’t just about picking up rides and earning income. There are tax regulations and expenses you need to track, and there are potential tax savings that might be overlooked if you go at it alone. By hiring Griffith Accountants, you’ll not only meet your obligations but will likely end up saving money in the long run. Our service is bespoke, tailored for Uber drivers, and we make sure you get every bit of relief you're entitled to.
If you’re ready to make your life simpler and your taxes easier, get in touch with Griffith Accountants today. We'll help you hit the road with peace of mind that your finances are handled properly.
Griffith Accountants: Helping Uber drivers navigate their taxes with ease.
Get started with us now or check out other useful resources for small business owners, like FAQs for Company Accounts or Best Practices for Preparing for an Audit.
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