If you drive a black cab, a private hire car or work through an app like Uber, Bolt or FREENOW, you are usually self-employed. That means you must tell HMRC about your income, keep good records and pay your own tax and National Insurance. This guide explains, in simple steps, what you can claim, how mileage works and when VAT matters. The figures below are for the 2026 to 2027 tax year (6 April 2026 to 5 April 2027) unless we say otherwise.
Are taxi and Uber drivers self-employed?
Many taxi and private hire drivers are self-employed sole traders. You earn fares, the app or radio circuit may take a commission, and what is left is your business income. You pay tax on your profit: your total fares and tips, minus your allowable business expenses.
If you are self-employed, you need to register for Self Assessment with HMRC and send a tax return every year. Some drivers instead run their taxi work through a limited company. Ask us if you are not sure which is right for you.
How much tax and National Insurance will I pay?
For the 2026 to 2027 tax year (England, Wales and Northern Ireland):
- Personal Allowance: the first £12,570 of income is usually tax-free.
- Basic rate: 20% on income from £12,571 to £50,270.
- Higher rate: 40% on income from £50,271 to £125,140.
- Additional rate: 45% on income over £125,140.
Income tax bands are different if you live in Scotland.
Self-employed drivers also pay Class 4 National Insurance: 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Class 2 National Insurance is no longer compulsory. If your profits are below £7,105, you can choose to pay voluntary Class 2 (£3.65 a week) to protect your State Pension.
Allowable expenses for taxi and Uber drivers
Allowable expenses are costs you pay only for your business. They reduce your profit, so you pay less tax. Common expenses for drivers include:
- App or operator commission and service fees (for example, the fee Uber or Bolt keeps from each fare)
- Radio rent or circuit fees
- Private hire or hackney carriage licence fees, and council vehicle licence fees
- Medical checks and DBS checks needed for your licence
- Taxi insurance (the business part)
- Vehicle hire or rent, if you rent your car
- Fuel or charging costs, repairs, servicing, MOT and tyres (unless you use the mileage method – see below)
- Car cleaning and valeting
- Mobile phone and data (the business part)
- Parking and tolls on business journeys (not parking fines)
- Accountant’s fees
If something is used for both business and personal life, such as your phone or car, you can only claim the business share. Keep receipts and a simple record of how you worked out the business share.
You cannot claim fines, penalties, everyday clothes or your normal food.
Mileage: simplified expenses or actual costs?
For your car, you can choose one of two methods.
1. Simplified expenses (flat mileage rate). For the 2026 to 2027 tax year, HMRC’s flat rates for cars and goods vehicles are:
- 55p per mile for the first 10,000 business miles
- 25p per mile for each business mile after that
This rate covers fuel, insurance, repairs, servicing and the cost of buying the car. You must keep a log of your business miles. You can still claim parking and tolls on top. Note: the 55p rate is new for 2026 to 2027. For earlier years the rate was 45p.
2. Actual costs. You add up all your real running costs (fuel, insurance, repairs, servicing and so on), take off the personal-use share, and claim capital allowances for the cost of the car itself.
Important rules from HMRC: you cannot use the flat rate for a vehicle you have already claimed capital allowances for, or one whose costs you have already included as an expense. Once you start using the flat rate for a car, you must keep using it for as long as you use that car for your business.
Which method is better depends on your car, how many miles you drive and your costs. It is worth working out both before you choose.
Do taxi and Uber drivers need to register for VAT?
You must register for VAT if your taxable turnover for the last 12 months goes over £90,000. You must register within 30 days of the end of the month when you went over. You must also register if you expect to go over £90,000 in the next 30 days alone.
VAT for app-based driving can be complicated, because it depends on how your app or operator contract works and what counts as your turnover. If your fares are getting close to £90,000, speak to an accountant before you go over. See our VAT returns service.
Making Tax Digital: what changes for drivers
Making Tax Digital (MTD) for Income Tax has started. You must use it if your “qualifying income” is over the limit. Qualifying income is your total income from self-employment and property before expenses (your turnover, not your profit).
- From 6 April 2026: qualifying income over £50,000
- From 6 April 2027: qualifying income over £30,000
This means your fares before expenses count. If your qualifying income is over £30,000, you will need MTD from April 2027. Under MTD you keep digital records in HMRC-recognised software and send short quarterly updates to HMRC.
Self Assessment deadlines
For the 2025 to 2026 tax year (6 April 2025 to 5 April 2026):
- 5 October 2026: register for Self Assessment if you need to file for the first time
- 31 October 2026: deadline for paper tax returns
- 31 January 2027: deadline for online tax returns and for paying the tax you owe
If you miss a deadline, HMRC can charge penalties and interest.
Simple record-keeping tips
- Download your weekly or monthly statements from each app you drive for.
- Keep a record of cash fares and card fares that do not go through an app.
- Keep every receipt: a photo on your phone is fine.
- Keep a mileage log if you use the flat rate.
How UK Tax Co can help
We work with taxi and private hire drivers all over the UK, online. Our taxi driver accounts service covers your records, expenses and tax return. Our fees are clear:
- Self Assessment tax return: £120
- Making Tax Digital: £79 per quarter
- VAT Returns: £129 per quarter
Frequently asked questions
Can I claim my whole car if I also use it for personal trips?
No. You can only claim the business share. If you use the flat mileage rate, you only claim for business miles.
Can I switch from the mileage rate to actual costs?
Not for the same car. Once you use the flat rate for a vehicle, you must keep using it while you use that vehicle for your business. You can choose again when you change car.
Do I pay tax on tips?
Yes. Tips you receive as a self-employed driver are part of your business income and must go on your tax return.
I drive for Uber and Bolt. Do I need two tax returns?
No. If you are a sole trader, all your driving work goes on one Self Assessment tax return. Add up your income and costs from every app and from any other driving work.
When will I need Making Tax Digital?
From 6 April 2026 if your qualifying income (before expenses) is over £50,000, and from 6 April 2027 if it is over £30,000.
This article is general guidance, not personal tax advice.
Need help? Call UK Tax Co on 020 7050 0712 or WhatsApp 07579566666.