Working as a taxi driver? Getting yourself an accountant may seem excessive, but it is actually beneficial for you. Learn how Accountants for Taxi Drivers can make your life less stressful.
Accountants for Taxi Drivers: Why Should You Hire One?
Whether you are an Uber or taxi driver, you are considered self-employed by HMRC. It may surprise you, but such a career can be one of the most at-risk for tax investigations. One way to prevent a sudden, stressful audit is to work with accountants for taxi drivers.
If you’re still on the fence and think it’s overkill to hire an accountant, below are a few ways they can make your life on the road a little easier.
Sound Financial Advice
Being self-employed is akin to being an entrepreneur—think of your driving gig as running your own business. You must stay on top of your finances to know whether you’re operating profitably or at a loss. Without an accountant, you might be unaware of what’s costing you more than your revenues.
Accountants for taxi drivers understand how one can profit from such a career. They can identify areas for improvement so you can be more cost-efficient and profitable. By analysing your finances, they can see where expenses may be too high but don’t translate to increased income and bottom line for your business.
Besides tracking your service revenues and expenses, an accountant can also help you make better financial decisions. Suppose you want to shift as a self-employed private hire or Uber driver. Since your accountant doesn’t have the same bias as your family or friends, they can give you objective advice.
Know the Expenses a Taxi Driver Can Claim
Uber, private vehicle and taxi drivers must track and keep updated records of their earnings and expenses as they’re critical to accurate tax reporting. While paying the correct taxes is important, claiming allowed expenses is just as critical to avoid overestimating your tax obligations.
Keep in mind that you cannot deduct all expenditures from your tax. The primary requirement to claim the expense is that it should be business-related. So if you’ve driven your vehicle for a personal trip, such as an errand or vacation, the consumed fuel and toll fees are not tax-deductible.
If you work with accountants for taxi drivers from Sterlinx Global, we will help you figure out which of your expenses can be used to claim back taxes. We will also ask you to keep the invoices or receipts of the following eligible costs:
- Fuel, which can be petrol, diesel, or electricity for electric vehicles
- Toll charges
- Road tax cost
- Parking fees
- Vehicle repairs, maintenance, and MOT tests
- Roadside assistance
- The cost of cleaning your taxi, including washing and detailing
- Registration, license fees, and other legal expenses concerning your vehicle
- Professional membership fees and related subscriptions
- Insurance premiums
- Advertising and marketing costs
If you hire a professional to handle your accounts, you can also claim their fees against your tax. It’s best to consult an accountant to determine other tax-deductible expenditures incurred while driving your taxi for business purposes.
Did you know that when you’re a self-employed Uber or taxi driver, you can claim back mileage as an expense? Driving a thousand miles a year will take its toll on your vehicle, but you can recoup the costs by recognising it as an expense.
There are two approaches to claiming mileage expense: simple and complex methods. Under HMRC’s guidance for the simple method, you can claim 45 pence per mile for the first 10,000 miles travelled within the same year and 25 pence per mile beyond the said threshold.
On the other hand, the more complicated approach involves detailing the expenses related to the miles you’ve driven while on shift or during work. While this method is more time-consuming, it allows you to deduct more expenses.
There are upsides to both methods, and they require accurate recordkeeping—claiming a higher mileage reimbursement despite a lack of records is unacceptable. If you want to know which is the better option, speak to accountants for taxi drivers from Sterlinx Global.
Handle Tax Matters
Taxis, private vehicles, and Uber drivers must register as self-employed with HMRC. As such, you have to calculate your tax liabilities and file the corresponding Self-Assessment return every 31 January following the covered tax year.
Remember that income tax isn’t your only obligation to the government as self-employed; you have to pay National Insurance contributions, the amount based on your profits. While it isn’t tax, you must include it in your Self-Assessment. If you have other income streams, such as dividends, you also have to declare them.
When you hire accountants for taxi drivers, they will oversee tax matters on your behalf. You’ll be confidently compliant with accurate, timely returns and payments, allowing you to focus more on driving farther and safer.
But accountants do more than tax filing. As they are updated on legislative changes, they will ensure you remain in compliance to avoid penalties. They can help you maximise deductions to minimise tax obligations and save money.
Getting yourself a good accountant often pays for itself and more, especially in avoiding the dreaded tax investigation. Since they guide and advise you, you can refrain from doing anything that can trigger an audit. And if the unfortunate happens, your accountant will help you resolve the audit or dispute.
Save Time and Energy
As an Uber, private vehicle, or taxi driver, you should pay attention to the road rather than bookkeeping, taxes, and compliance. An accountant can take over these critical yet time-consuming tasks, allowing you to go on more, longer and better-paid trips.
When you work with accountants for taxi drivers, you don’t have to worry about making erroneous filings and missing deadlines; the burden is on them. While you still need to keep records of earnings and expenses for at least five years, you’ll have stress-free tax compliance when you hire a professional.
Frequently Asked Questions
Is it cost-efficient to hire an accountant when I’m only a taxi driver?
If you want to know how hiring one will benefit you, estimate the cost of doing your Self-Assessment. For example, it will take 10 hours to finish this task, and every hour you allot will cost you £5 in earnings. You could’ve earned £50 and more had you left the job to an accountant.
How do I find accountants for taxi drivers?
Begin searching on the Internet, but keep your search localised. Go with a firm with experience working with self-employed persons rather than those offering general services. We at Sterlinx specialise in freelancers and the like, making us more attuned to their needs.
Can accountants provide VAT guidance?
Yes, they can. If your annual turnover exceeds the specified threshold for the year, you should be VAT-registered or face penalties for failing to do so. But even if you’re earning below the limit, you can still voluntarily register for VAT. We can help you with that.
Hiring accountants for taxi drivers may seem like an expense you can’t afford. But if you think about how they can make your life easier by managing your finances and helping you overcome tax burdens, the benefits significantly outweigh the costs.