If you are a taxi driver and you are investigated these are the things that HMRC will want to look at in detail

HMRC will have an estimate of what they think a taxi driver should earn and what their costs should be. It is up to you to prove your figures are right and you do this by having good records.

Mileage Allowances

Taxi drivers can claim as an alternative to vehicle running costs mileage allowances of 40p for the first 10,000 miles and 25p per mile thereafter. You may not claim mileage allowance and vehicle running costs. Should you choose to claim the mileage allowance then keep good records of mileage covered, purpose of journey.

Taxi Capital Allowances

If you bought a vehicle in the financial year 2007-08 and used the vehicle as a taxi you can claim a first year writing down tax allowance of 25% of the cost of the taxi, restricted to 3,000 pounds for vehicles costing over 12,000 pounds. On vehicles purchased in previous tax years you can claim 25% writing down allowance on the balance not yet claimed. If you have bought and sold a vehicle used as a taxi during the financial year the tax allowance is restricted to any loss made on resale and any profit made over the written down value is taxable as a balancing charge. First year allowance on non vehicle assets in the current tax year 2007-08 is 50% for small businesses.

Taxis bought on Hire Purchase

Claim capital allowances on the original cost of the vehicle, interest and other charges count as business expenses.

Taxi Running Costs

Taxi drivers should enter fuel costs in sales not motoring expenses. Do not claim fuel expenses in the taxi accounts when you are on holiday, the revenue will check should they inquire into your self assessment tax return. Taxi running costs also include repairs, servicing and parts including tyres, road tax, taxi insurance and AA/RAC membership. Include radio hire and taxi office costs in general administrative expenses. For more information click here.

Household expenses

If you run your taxi business from home you can claim a proportion of household expenses as business expenses in the taxi accounts. Household expenses are likely to be disallowed unless they are either specific to the business or a specific area of your home is devoted entirely to your taxi business. Using part of a room part time would not be sufficient to include the household expenses in the taxi driver accounts.

Spouse Costs

You can claim expenses for partners who work for your taxi business and payments up to 100 pounds per week would not attract income tax or national insurance however any payments claimed in the taxi driver accounts must be real payments for real work done. The Revenue naturally adopt a strict view on taxi expenses claimed for partner work as it is an area some people might use to reduce the tax liability. Care is required to justify the partner as an expense.

Showing 6 comments
  • Andy James
    Reply

    Taxi drivers I spoke to all laughed at Tax. they said its cash in hand and the ILR will never know what they earn they lie about it. Hence they all have massive houses and 4 kids. Utter disgrace, Taxis should be regulated.

    • Musherboy
      Reply

      That was the old days. No self cert mortgages mean you can only borrow 4 times a joint income. If you wanna get a house you gotta show it all

  • Anonymous
    Reply

    Can u claim tax credits when you buy a taxi on hire purchase

  • David
    Reply

    Hi how much tax should I pay

  • danish
    Reply

    please help me out for the calculation of following requirement:

    if per mileage rate is £6 and additional mileage is £2.75
    assume if you drive your car 100 miles so 40 miles will considered empty miles .

    so what would be

    1. Nubmer of fares
    2. Business mileage
    3. Number of hours worked
    4. value of fares

Leave a Comment

Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt
0

Start typing and press Enter to search