It does come with its complexities though, because while Uber drivers are now classed as ‘workers’ (so you’re entitled to things like National Living Wage, holiday pay, and a pension), you are not an employee.
So, despite the new worker laws, for tax purposes you’re self-employed, and that means submitting a tax return. We’re here to talk you through the taxes you need to pay as an Uber driver as well as the expenses you can claim.
If your self-employed earnings reach this threshold, you’ll normally set yourself up as a sole trader. This means you’ll submit an annual Self Assessment tax return to let HMRC know about the profits (or losses) you’ve made – as well as any expenses you need to claim back.
You must register for Self Assessment once your income reaches the trading allowance threshold, even if you don’t make a profit.
What business structure should I be as an Uber driver?
If you are Ubering as a side hustle then lots of people find that being a sole trader is the easiest way to go about this because there’s no start-up fees, and it’s fairly straightforward in terms of staying HMRC compliant.
What expenses can I claim as an Uber driver?
A benefit to being self-employed is the ability to claim back business expenses, reducing how much tax you need to pay. Expenses are things you need to purchase in order to do your job – for example, fuel.
The expenses you claim must be wholly and exclusively for the purpose of trade.
Most of your costs are likely to qualify as a business expense, as long as you can prove that they’re genuine. Lots of drivers ask whether they can claim costs relating to their car, such as fuel, maintenance, repairs, and even the vehicle itself. The good news is that there are two ways sole traders can work out their vehicle expenses, and you can choose which one is most tax efficient for you.
Claim your actual expenses: You can claim allowable vehicle expenses on a range of costs such as insurance, hire charges, and breakdown cover. If you only ever use the vehicle for Uber, then you can claim all the allowable costs. If you sometimes use it for personal reasons, then you’ll only be able to claim for the proportion of costs which relate to your business.
If you claim your actual expenses then these might include:
Car cleaning or valeting
First aid kits
Billing charges from your carrier
Vehicle insurance and Public Liability insurance
Snacks or drinks for customers (if you’re a really generous driver)
Any cuts Uber take from your earnings
Your private car hire license fee
Any training costs
You can check out GOV UK for more examples of expenses you can claim if you’re self-employed.
What’s the difference between a worker and an employee?
In most cases, employees are given a contract that states how many days and hours they’ll work. For example, Monday-Friday 9 am-5 pm with an hour break. It normally means an employee is guaranteed work and, because they know their hours, they know exactly how much they’ll be taking home each month.
A worker, on the other hand, has more flexibility, with the autonomy to choose when they work but this can also mean there isn’t always as much work available. For example, if you drive in an area that has very little demand during off-peak hours, or somewhere that too many drivers already operate.
Has regular, set hours
Can work flexibly or shift patterns are irregular
Is expected to work as per their contracted hours/shifts
Can work when they want, and can turn down work
Is paid a set wage (so they know what they’ll take home each month)
Is paid if and when they work (shifts can differ, making it more difficult to predict earnings
They are seen as an integral part of the team
Their role may not always be required (for example an agency worker who does shifts during the busiest periods. They come in for peak seasons like Christmas, and finish when this period ends, while employees tend to work all year round).
Has an employment contract
Has an agreement but is never specified as an employee
Although there are rules in place to protect both employees and workers against discrimination or unlawful deductions from their wages, workers don’t have any statutory employment rights to protect them from unfair dismissal, or entitle them to statutory redundancy.
Will Uber report my income to HMRC?
Yes – starting from January 1st, 2024. New plans have been implemented to crack down on tax evasion within the gig economy, and digital platforms including Uber have been instructed by HMRC to disclose the amounts earned by their workers.
Technically nothing will change in terms of your reporting requirements, but it’s crucial to make sure you use a robust bookkeeping system to minimise any discrepancies between your figures and Uber’s.
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