How to do your tax returns on rideshare earnings – The self-employed driver’s guide

Dealing with self-employment taxes as an on-demand driver can be quite a chore. We’re here to help you set up your business and offer guidance down the road.

If you want to become an Uber driver, you’ll run a small business, so you need to accurately report your income and submit evidence of fuel and maintenance fees. Don’t leave this to the last minute because you’ll find yourself in a chaotic and stressful search for invoices and receipts.

It may sound daunting at first, but this guide will lead you through the process. Shout out to our partner GoSimpleTax for helping us clear things up for you. Using their app will make this process easier for you – check out their special offer at the end of this guide.

Self Assessment tax guide FAQ

What is a Self Assessment?

For employees, HMRC – UK's tax, payments and customs authority, deducts taxes directly from the gross salary, but if you’re an on-demand driver you need to do this yourself. HMRC will use your Self Assessment to calculate how much Income Tax and National Insurance you need to pay.

Do I Have to File a Self Assessment?

As an on-demand driver, you’ll be classed as self-employed from the moment your gross income exceeds the tax-free trading allowance of £1,000 per year. In other words, unless you drive only a few hours during weekends, you have to report your rideshare income and pay the taxes.

What’s a Tax Year?

A UK tax year runs from 6 April to the following 5 April. For example, the 2023/2024 tax year starts on 6 April 2023 and ends on 5 April 2024.

When are the Self Assessment Tax Return Deadlines?

You have to file your Self Assessment and pay your taxes by 31 January after the end of the tax year. So for tax year 2022/2023, you can submit your Self Assessment between 6 April 2023 and 31 January 2024.

Important: The paper return deadline is sooner, on 31 October - keep this in mind if you don't want to file online.

In order to pay your taxes, you first need to register as self-employed by 5 October of the second tax year.

What Happens if I Miss the Self Assessment Deadline?

You’ll get a £100 fine if your tax return is up to 3 months late. You’ll have to pay more if it’s later. On top of the late payment penalties, HMRC also charges interest on late payments.  

Step-by-Step Self Assessment Tax Return Guide

1. Register as Self-Employed

This step is essential to pay your taxes and avoid penalties. When registering, you’ll need your National Insurance number, as well as all relevant information regarding your address, the nature of your self-employment, and when exactly you started.

• If you’ve never submitted a return before, you will first need to register for Self Assessment and Class 2 National Insurance

After you create an account and register for taxes, HMRC will send you a letter with your 10-digit Unique Taxpayer Reference (UTR) and set up your account for the Self Assessment online service.

• If you’ve sent a return online before, you’ll need to complete form CWF1 to re-register online. You can find your UTR here if you’ve lost it, but it’s also included in any correspondence you’ve previously had from HMRC concerning your tax return.

Important: Register by 5 October after your first tax year to avoid any penalties.

2. Fill in Your Self Assessment Tax Return

Before you start, make sure you have:

• the 10-digit UTR you received when registering as self-employed

• your National Insurance number

• records of your income (self-employment plus any dividends or share interest)

• records of any expenses relating to self-employment

• contributions to charity or pensions which might be eligible for tax relief

• P60 or other records of the income you’ve already paid tax on

Fill in the main tax return form (SA100)

You can do this in one of three ways:

• Submit via the HMRC website and get instant acknowledgement after submission

• Use commercial software such as GoSimpleTax to do this for you

Important: Bear in mind that the submission deadline for paper returns is 31 October. We recommend one of the first two methods instead, because then you have until midnight on the 31st January to submit your Self-Assessment tax return.

It's best to get familiar with the online process early, as from April 2023, HMRC will require you to file your self-assessment digitally and provide updates every quarter via your digital platform.  

Regardless of which option you choose, it’s best to take a look at the forms and helpsheets first, so that you know exactly what goes where.

• To submit online, sign in to your account you created earlier

• To submit your SA100 form via mail, download the SA100 form from the link above, fill it in following the instructions, and mail it to Self Assessment HM Revenue and Customs BX9 1AS United Kingdom

Fill in the supplementary pages

Your on-demand driving activity is classed as self-employed, so you’ll have to report your rideshare income on a supplementary form, SA103. This is also where you get to declare any allowable expenses which will be deducted from your tax bill. There are two options:

• SA103F - if your annual turnover was more than the VAT threshold* for the tax year

• SA103S - if your annual turnover was less than the VAT threshold* for the tax year

* £85,000 as of 2022/2023

You’ll need to enter your turnover under the business income section. This is the grand total of your income during the tax year before expenses. If you have other sources of self-employed income, you can enter these separately, but make sure you add the one with the most income as your main employment. If you have other income to declare that’s not considered self-employment, you may need to fill out other supplementary forms too. See the full list of supplementary pages

Claiming your tax relief

You may be able to claim tax relief to lower your Self Assessment tax bill thanks to allowable expenses. There are many ways to reduce your tax liability, but as an on-demand driver, these three are the most relevant:

• Car lease payments – You can claim back the monthly cost of any car lease. This will extend to servicing and insurance too.

• Buying a new car – If you buy a car solely for taxi driving, you’re entitled to relief on the total purchase. Again, you can make additional claims on services and insurance.

• Mileage – The fuel you use to travel for work can qualify as an allowable expense. Specifically, 45p per mile is the tax-free approved mileage allowance of the first 10,000 miles in the tax year. Be careful, because if you claim this, you won’t be entitled to either of the above options.

Your car-related expenditure isn’t the only cost that can claim against. You can also reduce your liability if you buy a computer for work or claim a room’s share of household bills (gas, electricity, telephone, broadband, and even rent) if you use that room as a home office.

Important: For all this, you’ll need to meticulously record and submit evidence of each expense, but you don’t need to send these in when you submit your Self Assessment tax return. However, keep these records of expenses for five years in case HMRC asks for them.

3. Pay Your Self Assessment Tax Bill

Once you’ve submitted your Self Assessment tax return, HMRC will tell you how much tax and National Insurance Contributions you owe. Here’s how you can pay your Self Assessment tax bill:

• Online through your bank account - same or next day

• Online- or telephone banking – same or next day

• Online via debit or corporate credit card – same or next day

• Clearing House Automated Payment System (CHAPS) – same or next day

• At your bank or building society – same or next day

• Bacs – 3 working days

• By cheque via post – 3 working days

• Direct Debit – 3 working days (up to 5 days at the first setup)

Tip: If you’re making your payment close to the deadline, choose one of the faster options to avoid penalties.

Pay your Self Assessment tax bill in instalments

Paying your taxes just once a year is something you need to prepare for, as it can be one hefty bill. To avoid such a big one-time expense, you can distribute your tax payments throughout the year. Once you’re up to date with your Self Assessment payments, you can start making advance payments in weekly or monthly instalments on your next tax bill. For this, you can arrange for what is called a budget payment plan:

• Open your HMRC online account

• Go to the Direct Debit section and choose the budget payment option when filling in the Direct Debit form

You can also pay your past liabilities in instalments if:

• you owe less than £10,000

• you don’t have any other payment plans or debts with HMRC

In this case, however, you’ll have to pay interest, and if you don’t keep up with your repayments, HMRC can ask you to pay everything you owe.

Important: Pay all the taxes you owe until 31 January after each tax year to avoid any penalties.

Using the GoSimpleTax Self Assessment tax return calculator you can track your tax liability in real-time and log your expenses on the go. The app is officially recognised by HMRC and it gives you tips to help claim all your allowances and save money by avoiding any penalties. Register now for a 30% Splend customer discount Here's how:

Self Assessment Terminology

Understanding the Self Assessment process can be difficult and confusing, especially because of the technical terms and information. To make it easier, we've put together a glossary of terms to help you better understand the tax terminology:

Accounting year - the 12-month period covered by your business’s accounts, which may or not be the same as the UK tax year. This means between 6 April of the first tax year -5 April of the second tax year.

Tax year - 12-month period covered by a Self Assessment tax return. It’s the same for everyone who pays tax via Self Assessment – 6 April until 5 April the following year.

Allowable expenses - business costs that HMRC allows you to deduct from your profits. These reduce your profits and resulting Income Tax bill.

Income - money you receive as a rideshare driver for the rideshare services you offer to customers. The money you receive is your personal income.

Trading allowance - the first £1,000 of income that you earn from self-employment is your trading allowance and it isn’t subject to tax.

Tax relief - these enable you to pay less tax to cover money you’ve spent on business expenses or self-employed costs or to get back tax or have it repaid in another way (eg into a personal pension). You get some types of tax relief automatically, but you must apply for others.

Simplified expenses - a quicker and more convenient way of calculating some business expenses using flat rates instead of working out the actual cost. HMRC allows this. Can be used for vehicle and fuel costs.

Self-employed - working for yourself as a freelancer, contractor, agency worker or business owner, rather than being employed by an employer.

SA100 - the main Self Assessment tax return that you need to fill out and file.

UTR - Unique Taxpayer Reference – a 10-digit code HMRC uses to identify self-employed people and their businesses for tax purposes. You need to include it in your Self Assessment tax return.

National Insurance contributions: contributions you pay to qualify for certain benefits and the State Pension. Self-employed people pay Class 2 and Class 4 National Insurance contributions (NICs).

About Splend

We’re PCO car specialists enabling on-demand drivers to make money by driving. Our vision is a future where every on-demand driver can be successful. We can set you up with a brand-new or new-model car, and provide the training and support you need to become a more profitable, safer, and fulfilled driver. Don’t take our word for it — Uber drivers rate us excellent on Trustpilot. Drop by our London Hub at 393 Edgware Road Cricklewood, London, email us, or say hello on 0333 016 4331