Uber driver’s guide: Everything to know about taxes for PCO drivers in the UK

Millions of PCO drivers are working in London and many of them have no idea about the taxes and how to fill the self-assessment on their own. That’s why sometimes the tax deadlines pass and no PCO driver, especially Uber drivers will notice the assessment. As we are always worrying about you to avoid any loss on your earnings, we are here to tell you the details of Taxes for PCO drivers in London to prevent you from any fines on the taxes. Just note that if we mentioned Uber drivers’ taxes, we mean all PCO drivers, just because most of the PCO drivers in London are Uber drivers.

Uber driver’s guide: Everything to know about taxes for PCO drivers in the UK

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  • How much tax does an Uber driver pay in the UK? – the annual income tax
  • Road taxes for PCO drivers- the excise duty
  • How to pay the tax as a self-employed PCO driver?
  • When is the tax registration date for Uber drivers?

How much tax does an Uber driver pay in the UK? – the annual income tax

The main tax Uber and PCO drivers are involved in is the income tax because as a PCO driver in the UK, you are most likely considered as self-employed. However, some road taxes are going to be considered for you too. In total, let’s take a look at income taxes first and then we will check the road taxes. Note that in this level, you will be asked to pay the national insurance taxes as well.  

The majority of taxi drivers are private hire drivers in the UK and their self-employment business is called “Sole trade”. So when do PCO drivers need to complete the self-assessment for annual income? As soon as their annual income goes over £1000, they need to fill the assessment.

The point is, the more annual income will lead you to a higher tax rate. The national insurance tax is exactly the same and will be calculated based on your annual income. Let’s clarify it by giving you an example based on 2020-2021 releases of tax returns:

If we consider Joe is a PCO driver and his annual income is about £25000, he will have to pay the following items as the tax (you can figure out the fees based on your annual wage by doing some calculations):

  1. The annual class 2 national insurance tax for £158.60 (£3.05 for each week).
  2. No class 4 national insurance tax is considered for 38% (the percentage may vary for different incomes. the point is what government consider is correct and we only mention an example) of the income so that the annual income for Joe is considered £15500 (25000-38%=15500) and the income tax of Class 4 is calculated on this new revenue.
  3. 9% of the calculated annual income of Joe is considered for income tax which would be £1395
  4. The total tax for Joe (class 4+ class 2) would be the amount that he needs to pay and it would be £1553.60.

There are some notes to mention as well:

  • If your 38% of the income (this is considered as the profit of your income) is less than £6475, no national insurance tax is necessary to pay you.
  • You can read the details about taxing to see if you are eligible for the taxes or not through the website of self-employed National Insurance rates.
  • You can also simply calculate the tax on your income through the tool of gov.uk self-assessment tax bill tool.
  • If the annual income (regardless of profit) is less than £12500, you won’t have to pay for annual income taxes.
How much tax does an Uber driver pay in the UK? - the annual income tax

Road taxes for PCO drivers- the excise duty

Vehicle excise duty or VED is considered for every vehicle on the public road. However, as a PCO driver you may be aware of this issue, we offer a quick guide on it to make sure everything is going well on paying the taxes. This tax is a double level payment:

  1. The first year that the vehicle is on the roads (which is higher).
  2. The renewal tax for coming years (which is lower).

Note that in calculating the road tax, the emission produced by your car plays an important role in finding the correct amount of tax. The more powerful vehicles produce more emission and as a result, more tax is considered for them. That’s why we highly recommend an EV PCO car instead of fuel based ones (the full electric vehicles are free of road tax). Generally, the items below can determine the amount of tax required by the government:

  • Vehicle type
  • Registration date
  • Engine size
  • CO2 emissions
  • Fuel type (e.g. petrol, diesel)

How to pay the tax as a self-employed PCO driver?

If you want to fill the self-assessment on annual income tax, you need to go check the official website of gov.uk and find the self-assessment page. The whole process can be done online through the website. Note that when you are completing the forms you need to mention you are a self-employed driver and a little personal information is required to mention.

After registration, a letter will be sent to you (within 10 days) named Unique Taxpayer Reference (UTR) number and you need to keep a record of it.

If you want to pay the road tax, which is an easy process, you need to refer to Gov.uk again and pay the annual road tax through a debit or credit card. The things you need to have would be:

  1. A recent reminder letter (V11) or ‘last chance’ warning from the DVLA
  2. Your vehicle log book (V5C) – this must be in your name
  3. The green ‘new keeper’ slip from a log book (for newly purchased vehicles)

If you didn’t have the mentioned documents, you will need to apply for a new log book. Which costs about £25.

How to pay the tax as a self-employed PCO driver?

When is the tax registration date for Uber drivers?

Self-employed assessments need to be done in the second tax year and April is the start criteria (from 6 April to 5 April). For example, if Joe starts his job in February 2021, he needs to fill the assessment until 5 October 2021. However, if he starts his job any time after April 6, he will fill the assessment before 5 October 2022.

Hint: if you want to start your job as a PCO driver, you don’t need to feel the tax assessment right away. Just work for a few months and make sure your earning passes from £1000 then feel the assessment.

Hope you did the whole taxing process well and Good luck! As the final thing to mention, currently the whole process and papering runs digitally so no letter will be included by the post!  

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