Top 10 Expenses You Should Claim from Your Tax as an Uber or Taxi Driver in the UK

by Eunice | Sep 14, 2022 | UK Accounting

1. Fuel Cost

You can reclaim 100% of the VAT paid on fuel used for business reasons. You must, however, be able to show that the fuel was utilized solely for work purposes and that no personal trips were conducted. Unless you own a cab company or a driving school, this is challenging.

2. Toll fees

Toll fees are tax-deductible from taxi driver tax only if you travel for business purposes. HMRC deems a journey to be business-related if:

• It’s a requirement of your position. For example, suppose you’re a lorry driver hauling items from an Essex warehouse to Edinburgh.
• You must temporarily work somewhere other than your typical workplace. For example, suppose you’re working for a few days from a client’s office in another city.

3. Car repairs/maintenance

If you use a car for business, you can claim the VAT you paid on repairs and maintenance as input tax. It makes no difference whether the car is used for personal purposes or whether you have elected not to claim VAT on-road fuel.

You cannot claim VAT on repairs as input tax if you are a sole proprietor or partner who uses a car purely for personal purposes.

4. Annual Road Tax Cost

If you use your vehicle only for work, you may be eligible for tax reduction. You may be able to claim a tax reduction on the allowed mileage rate if you use your vehicle for business. This takes care of the costs of owning and operating your automobile.

You’ll need to do the following to figure out how much you can claim for each tax year:

• Keep track of the dates and distance of your business trips.
• Add up the mileage for each vehicle type you’ve driven for work and subtract any reimbursements your employer gives you for your expenses (sometimes known as mileage allowance).

5. Car wash or cleaning cost

The expense of car cleaning is usually included in the normal mileage fee. However, if you have additional car cleaning expenses as a result of your self-employment business (over and above what you would normally pay for), the extra car cleaning charges are deductible.

6. Registration & License fees

Uber drivers can claim tax relief on professional subscriptions or fees that must be paid to do a job, according to HM Revenue and Customs (HMRC). This category includes ARB annual retention fee payments. Such memberships are considered indispensable to the job but are wholly deductible.

7. Insurance fees

Your business’s public liability insurance is tax-deductible. As an ‘allowable expense,’ business insurance is one of the costs you can deduct when calculating your taxable profit.

You can deduct business expenses from your income when computing your taxable earnings for your tax return, such as insurance fees. As a business expense, public liability insurance is included in HMRC’s definition of permissible expenses and is tax-deductible.

8. Accountancy fees

Yes, the quick answer is yes. The HMRC permits businesses to claim a tax deduction for a portion of their accountant’s expenses. Please keep in mind that not all fees are tax-deductible due to the nature of accountants’ jobs.

Accountants help firms with a wide range of services, including completing corporate accounts and financial statements for the majority, if not all, of them.

9. Advertisement/Marketing (posting on sites and paying ads)

As an Uber driver, you are allowed to claim expenses for advertising in newspapers or directories as well as social media and bulk mail advertising.

10. Membership fees (if a member of any taxi association)

If you need to pay professional membership fees to execute your job, you can claim a tax reduction. If being a member of a recognized professional group or learned society is relevant to your career, you pay annual subscriptions to them.

Frequently Asked Questions About the Top 10 Expenses You Should Claim from Your Tax as an Uber or Taxi Driver in the UK

How do I claim?

You can claim your VAT when you complete your self-assessment online. All Uber drivers are required to register with HMRC to declare their taxes by October 5th.

Can I deduct fines and penalties?

Penalties and fines – Fines and penalties for businesses are common. They cannot be claimed, whether they are from HMRC or other organizations. The rules must be obeyed. Businesses should not be breaking them, so they cannot be claimed against because they are not considered a necessary component of conducting business.

Is legal fees tax deductible?

Legal fees – this is a difficult one because certain legal bills are deductible while others are not. Loan fees, patent fees, and trademark fees may vary depending on their nature and purpose.

Top 10 You Should Claim From Your Tax as a Restaurant Owner in the UK

by Eunice | Sep 9, 2022 | UK Accounting

Restaurants can claim back several expenses!

If you are a restaurant owner and you’re still not tracking down your expenses properly, then you might not be able to claim back some of your expenses! As a restaurant owner, the sector is facing a “minefield” of issues, including rising food and energy prices, as well as an increase in National Insurance contributions, which begins in April in the U.K. Since July 2020, the tourism and hospitality sector’s VAT rate (the tax paid when buying goods and services) has decreased to facilitate recovery from the Covid epidemic.

However, even if uncertainty continues to grow, you can continue to claim some expenses back from HMRC. At Sterlinx Global, we provide actionable intelligence to help your restaurants thrive through these difficult times.

You may be dreading tax season as you struggle to keep your business running during this difficult period of health and economic crises. However, identifying deductions to reduce your business income can help you save money on taxes. Here are ten essential tax deductions—as well as a tax credit—that you may take advantage of to lower your tax burden.

1. Rent cost

The amount of VAT charged on rental payments is determined by the property. Rental payments are liable to VAT if the landlord has ‘elected to tax’ for VAT purposes; otherwise, rental payments are VAT-free.

As a restaurant owner and your business is VAT-registered, your costs will not be affected by the landlord’s decision to tax or not. You can recover any VAT you pay, just like you can for other business expenses.

2. Salaries and wages

As a restaurant owner, employee salary and benefits account for a significant amount of your expenses. You can, fortunately, deduct:

• Bonuses, commissions, sick pay, and vacation pay are all included in employee pay.
• Employee perks such as health insurance and life insurance
• Like unemployment, you pay employment taxes depending on employee work and tips. Taxes on Social Security and Medicare

3. Advertising and marketing

In 2022, you may have done a lot more advertising to generate sales, especially during and after the COVID-19 pandemic lockdowns. Restaurant owners may deduct those expenses, which include signage, social media advertising, and promotions that were done to boost sales for your company. You can also write off the expense of meals and entertainment at a local restaurant marketing event.

4. Food cost (cost of goods sold)

Food supplies for restaurant owners are tax-deductible, and HMRC provided guidance for supplies that took place between 15 July 2020 and 31 March 2021. Note that this is not a supply in the course of catering if you provide food that your customers must prepare themselves before eating. This is true whether the food is delivered to your clients or picked up by them.

5. Vehicle cost: fuel cost (if resto has delivery service, please refer to HMRC’s simplified or actual cost for this)

You can depreciate the cost of an automobile you acquire for business (spread deductions out over time). In order to depreciate the car, you must utilize it for business more than 50% of the time and equally claim back VAT on fuel costs.

6. Vehicle cost: repair and maintenance (if resto has delivery service)

When you drive for business, as a restaurant owner, can deduct up to 50% of your car maintenance expenditures. If the car is used 50 percent or more for business, it might be deducted 50 percent of the time.

7. Admin expense

Administrative expenses can be deducted from business profits for tax purposes if they are incurred entirely and solely for the business.

8. Insurance

VAT is not charged on insurance transactions. VAT cannot normally be collected on goods and services purchased to make exempt supplies; for additional information, see paragraph 7.1. Some premiums earned under insurance contracts are subject to some impositions.

It’s important not to mix up IPT and VAT; they’re two completely different taxes. For VAT reasons, the word ‘insurance transaction’ differs from the term ‘insurance contract’ for IPT purposes. IPT, unlike VAT, is not refundable. Notice IPT1: Insurance Premium Tax contains more information on IPT.

9. Laundry & cleaning (table napkins, table cloths, etc.)

You can deduct the cost of your work attire as well as maintenance charges like laundry and dry cleaning for table napkins and tablecloths. As a business owner, the outcome could have a significant impact.

10. Miscellaneous expense

Other expenses that you can deduct as miscellaneous are fees for appraisals. Losses due to accidents and theft

Frequently Asked Questions about Tax Deductions for Restaurant Owners in the UK

How can I easily claim VAT for my expenses as a restaurant?

Your company bears the burden of proof for your deductions. You are not required to submit your business records with your tax payments, but you must be able to produce the documents to an auditor or inspector as proof of deductions. Maintain meticulous records for corporate travel, expenses, gifts, and depreciating assets.

How does my location impact what VAT I can charge?

Should you make a provision for food and drink at a location where you supply, you are required to charge the standard rate of VAT or a temporarily-reduced rate. In this case, you should carefully review what the word “premise” signifies, as it may not always refer to where your firm is located.

When do the temporary rates stop applying?

You should charge the standard rate if you provide any catering service for consumption outside your premises. The HMRC notice about the “temporarily reduced rate” is restricted to supplies that were made between July 15, 2020, and March 31, 2021. These supplies do not equally include beverages.

Conclusion

With so many expenses to track, restaurant owners should maintain detailed records and understand which costs are deductible to maximize their tax savings and ensure compliance with HMRC regulations.