Tax for Taxi and Private Hire Drivers in the UK 2026/27
How Self Assessment, mileage claims, PHV licence costs and VAT work for taxi and private hire drivers in the UK, including Uber and Bolt income for 2026/27.
Are Taxi and Private Hire Drivers Self-Employed?
Almost all taxi drivers and private hire vehicle (PHV) drivers in the UK are self-employed for tax purposes, whether they drive a traditional hackney carriage, work for a local private hire firm, or take bookings through an app such as Uber, Bolt or FreeNow. This is true even though a landmark 2021 Supreme Court ruling found that Uber drivers are "workers" for employment law purposes, entitling them to minimum wage and holiday pay from the platform. Employment status for tax and employment status for worker rights are assessed separately, and for most drivers the tax position remains self-employment.
Being self-employed means you are responsible for declaring your income to HMRC, paying your own Income Tax and National Insurance, and keeping business records -- none of this is deducted automatically as it would be through PAYE.
Registering for Self Assessment
If you start driving for a living, you must register as self-employed with HMRC. The usual deadline is 5 October following the end of the tax year in which you started trading. Once registered, you file a Self Assessment tax return each year covering the tax year running 6 April to 5 April, with the online filing and payment deadline of 31 January the following year.
If your total self-employed income from all sources is below £1,000 in a tax year, the trading allowance means you do not need to register or declare it. Most working drivers will exceed this quickly.
Mileage Rates vs Actual Costs
There are two ways to claim vehicle running costs against your driving income:
Simplified mileage rates (available to sole traders using their own vehicle):
- 45p per mile for the first 10,000 business miles in the tax year
- 25p per mile for each mile after that
This flat rate is deemed to cover fuel, insurance, servicing, repairs, and depreciation, all in one figure -- you do not separately claim fuel receipts on top.
Actual costs method:
- Claim the real cost of fuel, insurance, servicing, repairs, breakdown cover, and MOT
- Claim capital allowances on the purchase of the vehicle (subject to CO2-based rules for cars)
- Apply a business-use percentage if the vehicle is also used privately
| Method | Best for | Key point |
|---|---|---|
| Mileage rate | Drivers with lower-value or older vehicles, or who prefer simple record-keeping | Cannot also claim fuel or repairs separately |
| Actual costs | Higher-value vehicles, PCP/lease drivers, or high fixed running costs | Requires detailed receipts and a private/business mileage split |
Once you choose a method for a specific vehicle, you generally must continue using it for as long as you use that car for the business.
PHV Licensing and Other Fixed Costs
Private hire drivers face licensing costs that taxi drivers driving their own vehicles as sole traders can claim as business expenses when using the actual costs method, or in addition to mileage claims (since these are not vehicle running costs):
- Private hire driver licence fee (paid to the local council)
- Private hire vehicle licence fee for the car itself
- Enhanced DBS check renewal
- Council-mandated vehicle safety inspections and knowledge tests
- Public liability and hire-and-reward insurance (a higher-cost policy than standard car insurance)
- Radio circuit or platform "rental" or subscription fees charged by some private hire operators
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Estimate your take-home profit as a self-employed driverPlatform Income: Uber, Bolt and Local Operators
Whether your fares come through an app, a local private hire circuit, or cash jobs as a licensed taxi driver, all of this income is combined on your Self Assessment return. It does not matter which platform paid you or how -- HMRC treats it as a single trading income figure, from which you deduct your allowable expenses to reach your taxable profit.
Ride-hailing platforms increasingly share driver earnings data with HMRC under reporting rules for digital platforms, so it is important that your declared income matches what the platforms report. Keep your own weekly or monthly summary statements from each platform you drive for, as these are the clearest evidence of gross fares, platform commission, and any booking fees deducted before you are paid.
VAT: When Does It Apply?
Individual drivers rarely reach the VAT registration threshold of £90,000 in rolling 12-month turnover, since this reflects gross fares rather than take-home profit. However, drivers who operate multiple vehicles, run a small private hire firm, or combine driving income with another VAT-registered trade should monitor their turnover carefully.
There is a separate and often confusing VAT question for private hire operators (the firms that take bookings and dispatch drivers) relating to whether the operator is acting as principal or agent for VAT purposes on the fare itself. This affects the operator's VAT position more than the individual driver's, but if you run your own small operator business rather than just driving, professional advice is strongly recommended.
National Insurance for Drivers
Self-employed drivers pay Class 4 National Insurance on their trading profits, at 6% on profits between the lower profits limit and upper profits limit, and 2% above that, mirroring the equivalent employee thresholds. Class 2 National Insurance has effectively been abolished for most self-employed people from April 2024, though those with profits below the small profits threshold can pay Class 2 voluntarily to protect their entitlement to the state pension and other contributory benefits.
Other Allowable Expenses
Beyond vehicle and licensing costs, drivers can typically claim:
- Mobile phone costs and data plans used for taking bookings, at the business-use percentage
- Sat nav devices, dashcams, and phone mounts
- Accountancy and bookkeeping fees
- Bank charges on a business account
- A proportion of home costs if you handle admin, bookings or accounts from home
- Union or trade association membership fees relevant to the trade
Personal expenses such as ordinary daily meals while working, fines and penalties (including parking tickets), and everyday clothing are not allowable.
Keeping Records
HMRC expects self-employed drivers to keep records for at least five years after the 31 January Self Assessment deadline for the relevant tax year. A simple, consistent system works best:
- A mileage log or app recording start and end odometer readings, dates, and purpose of each trip
- Fuel and expense receipts, ideally photographed and stored digitally
- Monthly platform earnings statements
- PHV licence renewal paperwork and insurance certificates
Good records make completing your tax return faster and provide protection if HMRC ever opens a compliance check into your Self Assessment return.
Sources
Frequently asked questions
Are taxi and private hire drivers self-employed?
Most taxi and private hire drivers, including those working through Uber, Bolt or other platforms, are self-employed for tax purposes even though some platforms classify drivers as workers for employment law and minimum wage purposes. Self-employed status means you must register for Self Assessment and pay your own Income Tax and National Insurance.
Do I need to register for Self Assessment as a driver?
Yes. If you earn any self-employed income from driving beyond the £1,000 trading allowance, you must register for Self Assessment with HMRC, normally by 5 October following the end of the tax year in which you started trading. You then file a tax return each year by 31 January online.
Should I claim mileage or actual vehicle costs?
You can use simplified mileage rates (45p per mile for the first 10,000 business miles, 25p per mile after) if you are a sole trader using your own car, or claim actual costs (fuel, insurance, servicing, repairs, capital allowances) with a business-use percentage. Once you choose a method for a vehicle you must generally stick with it while you own that car.
Can I claim my PHV licence and vehicle test costs?
Yes. Private hire vehicle (PHV) driver licence fees, vehicle licensing fees, DBS checks and any council-required tests or inspections are allowable business expenses if you use actual costs, and are separate from mileage claims which only cover running the vehicle itself.
Do I pay tax on Uber or Bolt income separately from cash fares?
No. All self-employed driving income, whether paid through a platform like Uber or Bolt, via card payments, or in cash, is combined and reported together on your Self Assessment tax return. Platforms report driver earnings data to HMRC, so accurate record-keeping is essential.
When do I need to register for VAT as a driver?
You must register for VAT once your taxable turnover in any rolling 12-month period exceeds the VAT registration threshold of £90,000. Most individual drivers stay below this, but drivers running a fleet or private hire firm with several vehicles can exceed it. Note that some platform booking fees involve separate VAT treatment for the operator, not the driver.
What National Insurance do self-employed drivers pay?
Class 2 National Insurance was effectively abolished for most self-employed people from April 2024, though voluntary Class 2 contributions can still be made to protect your state pension record if profits are low. Class 4 National Insurance is payable on profits above the lower profits limit, aligned with the Class 1 employee thresholds, at 6% up to the upper profits limit and 2% above it.
Can I claim for my phone, dashcam and sat nav?
Yes, if these are used for business. Where an item like a mobile phone is used for both personal and business purposes, you can only claim the business-use proportion as an expense, unless you use simplified expenses which already build in an allowance for such mixed-use costs on some categories.
What records should a taxi driver keep for HMRC?
Keep a mileage log (start/end readings or a mileage-tracking app), all fuel and expense receipts, PHV licence renewal documents, platform earnings statements, and bank statements. HMRC expects records to be kept for at least five years after the 31 January submission deadline for the relevant tax year.
Can I claim clothing and car cleaning as expenses?
Ordinary clothing is not deductible even if worn for work, but a uniform specifically required by a private hire operator, or car valeting and cleaning that keeps the vehicle roadworthy and presentable for passengers, are generally allowable business expenses.
Try the calculators
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