Tax for delivery riders and taxi drivers 2026/27: registering, expenses, National Insurance and VAT
App delivery riders and taxi or private hire drivers in 2026/27: when to register, the 55p mileage rate vs actual costs, NI and platform reports.
The short answer
If you deliver food or parcels, or drive a taxi or private hire car, as a self-employed person (the app or operator pays you without taking tax off through PAYE), you are taxed on your profit: what you earn minus allowable costs. Once your gross income from it is over £1,000 in a tax year you must declare it on a Self Assessment return, registering first if you do not already send one. You pay Income Tax on your total income above your Personal Allowance and Class 4 National Insurance on profit over £12,570. For a car or van you can deduct either a flat 55p a business mile for the first 10,000 miles and 25p after that, or your actual costs, but once you choose the flat rate for a vehicle you are stuck with it for that vehicle. Delivery and ride apps that are UK reporting platforms tell HMRC what they paid you, every January.
To turn your profit into a tax bill, use the self-employed tax calculator. To compare the mileage flat rate with your real costs, use the simplified expenses calculator.
Are you self-employed? What the Uber case did and did not decide
Most of this page assumes you are self-employed. If a delivery company or taxi firm pays you through payroll with tax and National Insurance deducted, you are taxed as an employee on that pay and the self-employed rules below do not apply to it. If you are unsure, HMRC's check employment status for tax tool looks at how you actually work.
In Uber BV v Aslam [2021] UKSC 5, decided on 19 February 2021, the Supreme Court unanimously dismissed Uber's appeal. The question was whether the drivers were "workers" for the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998, which give workers the minimum wage, paid annual leave and other protections. The employment tribunal had found that the claimant drivers worked under worker's contracts for Uber London, and that finding stood (Supreme Court press summary; case page).
That is employment-rights status, not tax status. The press summary notes that the "worker" definition in section 230(3) of the 1996 Act "extends to some individuals who are self-employed". GOV.UK says "a person may have a different employment status in tax law" and that HMRC "may regard someone as self-employed for tax purposes even if they have a different status in employment law" (GOV.UK employment status). So a ruling that you are a worker gives you employment rights; it does not by itself move you onto PAYE. The decision was about the claimant drivers and Uber's London arrangements at the time, not about every app or every driver. Our worker, employee or self-employed guide sets out the three statuses.
Registering for Self Assessment and the £1,000 trading allowance
The trading allowance is a tax exemption of up to £1,000 a year on income from self-employment. GOV.UK says that if you have "gross trading income over £1,000" you must register for Self Assessment. Gross means before expenses, so a rider who is paid £1,500 in delivery fees but spends most of it on fuel still has to register (GOV.UK trading allowance; ITTOIA 2005 s.783A). The limit covers all your trades together, so delivering for two apps counts as one total.
Above £1,000, you can deduct the allowance instead of your actual expenses, not as well as them. For most drivers and riders the vehicle costs alone are worth more than £1,000, so claiming expenses usually gives the lower profit. GOV.UK puts it as: "If your expenses are more than your income it may be beneficial to claim expenses instead of the allowances."
If you have not sent a tax return before (or did not need to send one for the previous year), register by 5 October after the end of the first tax year in which your gross self-employment income is over £1,000; if that year is 2026/27 (6 April 2026 to 5 April 2027), the deadline is 5 October 2027. If you already file returns, you add the self-employment to your next one. GOV.UK warns you could get a penalty if you tell HMRC late (register for Self Assessment). Our side hustle tax guide covers doing this alongside a job.
Budget 2026, announced: the trading allowance and the Self Assessment reporting threshold for trading income will rise from £1,000 to £3,000 from 6 April 2027, through Finance Bill 2026-27. When this page was written that was an announcement, not law. For 2026/27 the figure is £1,000. (OOTLAR 1.5)
Income Tax and National Insurance on your profit
Income Tax is charged on your total taxable income, which includes your driving or delivery profit and any wages from a job. Most people have a Personal Allowance of £12,570. Rates differ if you are a Scottish taxpayer; the self-employed calculator applies the right bands for you.
For 2026/27, GOV.UK gives these National Insurance rules for the self-employed:
- Class 4: 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.
- Class 2: with profits of £7,105 or more, Class 2 is treated as paid to protect your National Insurance record, so you do not pay it.
- Profits under £7,105: nothing is due, but you can choose to pay voluntary Class 2 at £3.65 a week to protect your National Insurance record.
Both are paid through your Self Assessment return (GOV.UK self-employed NI rates). More detail is in our Class 2 and Class 4 guide.
Making Tax Digital for Income Tax
Making Tax Digital means keeping digital records and sending HMRC quarterly updates through compatible software, then a tax return. Whether you are in depends on your qualifying income: your total self-employment and property income before expenses (turnover), not your profit. Wages from a job do not count. A full-time driver can be over the threshold while making a modest profit, because fuel and vehicle costs are not taken off first (GOV.UK qualifying income).
| Qualifying income over | In the tax year | Start using MTD from |
|---|---|---|
| £50,000 | 2024/25 | 6 April 2026 |
| £30,000 | 2025/26 | 6 April 2027 |
| £20,000 | 2026/27 | 6 April 2028 |
HMRC checks the return for the earlier year and writes to you, but GOV.UK says that if you do not get a letter it is still your responsibility to check (GOV.UK: if and when you need MTD). Budget 2026, announced: late-submission penalty points will not be applied to quarterly updates for the 2027/28 tax year for people required to join in April 2027, though the updates must still be sent before the tax return. Under the current rules there are no penalties for missing a quarterly update deadline for 2026/27, and from 2027/28 each missed quarterly update deadline earns a penalty point. (OOTLAR 2.36; GOV.UK MTD penalties.) Deadlines and penalties are in our MTD quarterly deadlines guide.
Vehicle costs: mileage flat rate or actual costs
This is usually the biggest deduction a driver or rider has. There are two ways to claim, and the choice is made vehicle by vehicle.
| Vehicle | Rate |
|---|---|
| Car or van, first 10,000 business miles | 55p |
| Car or van, miles after 10,000 | 25p |
| Motorcycle, including a moped or motor scooter | 24p |
| Pedal bicycle | No flat rate |
The rates are set in ITTOIA 2005 s.94F and shown on GOV.UK. The 10,000-mile band is shared across all the cars and vans you put on the flat rate (s.94F(3)). "Motor cycle" takes the Road Traffic Act 1988 meaning (s.94G(4)): a mechanically propelled vehicle with fewer than four wheels weighing no more than 410 kg unladen (RTA 1988 s.185(1)), which takes in mopeds and motor scooters.
Rules that catch drivers out
- No flat rate for black cabs. GOV.UK excludes cars "designed for commercial use, for example, black cabs, hackney carriages or dual control driving instructors' cars"; HMRC's manual says the same (BIM75005). In the statute, a "car" excludes "a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used" (s.94G(2)(d)). Private hire vehicles are not among the examples HMRC gives.
- You cannot switch back for the same vehicle. If you claim the flat rate for a vehicle in one year, you must use it for every later year that vehicle is used in the business (s.94D(4)). HMRC says the business "can only change to or from an 'actual' basis when a vehicle is replaced".
- Capital allowances rule it out for good. A vehicle you have ever claimed capital allowances on cannot go on the flat rate, nor can a van or motorcycle whose purchase cost you deducted under the cash basis (s.94E).
- It covers hire and lease costs too. The flat rate replaces all spending on the "acquisition, ownership, hire, leasing or use" of the vehicle (s.94D(6)), so if you rent a car weekly to drive for an app and use the flat rate, you cannot also claim the rental. Fuel, insurance, servicing, repairs and road tax are covered by the rate in the same way.
- Pedal bicycles have no flat rate. Section 94D applies only to cars, goods vehicles and motor cycles. The 20p-a-mile cycle rate you may see quoted is the approved rate for employees (ITEPA 2003 s.230), not a self-employed deduction. A cycle courier claims actual costs: repairs, parts, and the business share of the bike itself.
- Business miles only. A mile counts only if the journey, or an identifiable part of it, is made wholly and exclusively for the business (s.94F(5)); HMRC expects a record kept at the time (BIM75005). Personal trips do not count.
Claiming actual costs instead
On actual costs you claim the business share of vehicle insurance, repairs and servicing, fuel, hire charges, vehicle tax and breakdown cover (GOV.UK travel expenses), with the private share taken out (ITTOIA 2005 s.34). Two further rules apply:
- Hired cars over 50g/km. If you hire or lease a car that is not electric and has CO2 emissions over 50g/km, 15% of the hire charge is disallowed (ITTOIA 2005 s.48, with the 50g/km test in CAA 2001 s.104AA). It does not apply to a car first registered before 1 March 2001, to a "qualifying hire car" (broadly, hire purchase with no purchase option or one costing no more than 1% of the new retail price, or a long funding lease), or to a vehicle that is not a "car" for this rule, which excludes vehicles of a type not commonly used as a private vehicle and unsuitable for such use, such as a black cab (s.48(1); s.49(1)-(2)).
- Buying the vehicle. Under the cash basis, which has been the default since 6 April 2024, a car you buy is claimed through capital allowances and other vehicles are claimed as an expense; under traditional accounting, all vehicles go through capital allowances (GOV.UK; cash basis). Our cash basis vs traditional accounting guide compares the two.
Capital allowances on a car in 2026/27 (GOV.UK business cars):
- New and unused, electric or zero CO2: 100% first-year allowance, if bought on or before 5 April 2027 for Income Tax (CAA 2001 s.45D(1B)). Zero CO2 means 0g/km (s.45D(4)), and for this allowance a vehicle of a type commonly used as a hackney carriage counts as a car (s.45D(8)(a)), so a new zero-emission black cab can qualify.
- Second-hand electric, or CO2 of 50g/km or less: main rate, 14% a year on the reducing balance.
- CO2 over 50g/km: special rate, 6% a year.
- Cars cannot get the Annual Investment Allowance. Vans, and motorcycles bought from 6 April 2009, are not "cars" for this purpose and can.
If you also use the vehicle privately, you claim only the business share (GOV.UK). In law, first-year and annual investment allowances are cut to a just and reasonable amount (CAA 2001 s.205), and a partly private asset goes in its own single asset pool with its writing-down allowances reduced the same way (s.206, s.207). Budget 2026 announced that the main rate will fall from 14% to 12% from 6 April 2027 for Income Tax, through Finance Bill 2026-27 (OOTLAR 1.42). For 2026/27 it is 14%.
Worked example: private hire driver
Suppose a driver owns a hybrid car with CO2 over 50g/km, bought second-hand for £12,000 and not yet claimed on. In 2026/27 they drive 30,000 miles, 25,000 of them for the business (83.3%). The running costs are illustrative: fuel £4,000, insurance £2,000, servicing and repairs £1,200.
- Flat rate: 10,000 miles at 55p = £5,500, plus 15,000 miles at 25p = £3,750. Total £9,250.
- Actual costs: 83.3% of £7,200 running costs = £6,000, plus a special-rate writing-down allowance of 6% of £12,000, cut to the business share = £600. Total £6,600 in the first year, with the allowance shrinking each year after.
Here the flat rate gives £2,650 more, but it then applies for as long as the car is used in the business. Your result depends on your own fuel, insurance and repair bills, so run your figures before the first return on a new vehicle. Parking, tolls and congestion charges are claimed on top under either method.
Budget 2026, announced: as announced on 27 October 2026, the rate for car and van miles above 10,000 will rise from 25p to 35p from 6 April 2027, for both the self-employed flat rate and the employee approved rate, by statutory instrument. When this page was written that was not yet law; for 2026/27 it is 25p. High-mileage drivers gain most from it (OOTLAR 2.7). The employee side is in our mileage allowance guide.
Other costs: phone, bags, parking, fines and licences
- Phone. The business share of your phone and data bills is allowable; you cannot claim the non-business use (GOV.UK office and equipment). A handset you keep is equipment: an expense under the cash basis, capital allowances under traditional accounting, in each case for the business share.
- Insulated bags, phone mounts, chargers and similar kit. Items you would normally use for less than two years are expenses. Equipment you keep follows the same cash basis or capital allowances split as the phone handset (GOV.UK).
- Clothing. Protective clothing needed for the work is allowable; everyday clothing is not, even if you only wear it while working (GOV.UK clothing).
- Parking, tolls and congestion charges. Allowable when incurred solely for the business, and HMRC says they are not covered by the mileage rate, so you claim them on top of it (BIM75005).
- Fines. Parking tickets, speeding fines and other penalty charges are not allowable (GOV.UK: "You cannot claim for ... fines or penalty charges").
- Taxi and private hire licence fees. GOV.UK's list of expenses does not name them. The test that decides them is the general one: a cost is deductible if it is incurred wholly and exclusively for the trade (ITTOIA 2005 s.34). If you are unsure about a particular fee, GOV.UK's advice is to contact HMRC.
Our allowable expenses checklist covers the rest.
Tax check when you renew a taxi or private hire licence
The check covers taxi driver and private hire driver licences, private hire vehicle operator licences in England and Wales, and booking office licences in Scotland. When you renew one, apply for the same type you held in the last year, or hold the same type with another council, you must first complete an HMRC tax check and give the council the 9-character code. The rules have applied since 4 April 2022 in England and Wales and since 2 October 2023 in Scotland and Northern Ireland; codes expire after 120 days, and you must do the check yourself, not through an agent (GOV.UK tax check; Finance Act 2021 Sch. 33). A first-ever licence does not need the check.
The app reports your earnings to HMRC
Under the Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023 (SI 2023/817), in force from 1 January 2024, UK reporting platform operators must report sellers to HMRC for each calendar year by the following 31 January, and give each seller the same information by that date (regulation 4(1) and (4)). GOV.UK names "delivering food, driving a taxi" as examples of the services covered. The first reports, for 2024, were due by 31 January 2025 (GOV.UK: selling on a digital platform).
- What the platform asks for: your full name, home address, date of birth and National Insurance number.
- What it reports: the total you earned on the platform in the calendar year, less fees, commission or taxes it deducted, split into quarters.
- The small-seller exclusion GOV.UK describes (fewer than 30 sales and under 2,000 euros) is for sales of goods; it is not described as applying to delivery or driving services.
GOV.UK stresses that a report "does not automatically mean that you owe tax" and does not replace your own records. Because the report runs January to December and your tax return runs 6 April to 5 April, you need your own figures for the tax year.
VAT for drivers and couriers
You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or if you expect your taxable turnover in the next 30 days alone to go over £90,000; below that, registration is voluntary (GOV.UK register for VAT; VATA 1994 Sch. 1 para. 1(1)). It is a rolling 12 months, not the tax year. For a self-employed courier the test is applied to your own turnover in the ordinary way.
For private hire drivers, the question is whose supply the journey is. HMRC's Budget 2026 note says: "In London PHVOs are required to act as the principal — the person making the supply of transport services to passengers. Outside of London, the PHVO is free to act as agent for the driver, with the driver accounting for VAT on the full fare if registered for VAT." It adds that there is no VAT law specific to private hire vehicles; the standard rules in the VAT Act 1994 apply (HMRC tax information and impact note). So how your fares count towards your own turnover depends on the terms of the operator you drive for. Check its terms, and ask HMRC or an adviser if you are near the threshold.
Budget 2026, announced: taxi and private hire journeys supplied through an agent will be treated as supplied by the agent, not the driver, so the operator charges VAT on the full fare. It is to apply only to operators above a turnover threshold still to be consulted on, with £50 million of annual fare turnover the lead option, and is to take effect from 2 January 2028 through Finance Bill 2026-27. Until then the current position above applies. (OOTLAR 1.77.) HMRC's impact note says some private hire drivers may decide to register voluntarily as a result, but that the measure is unlikely to result in more businesses being required to register (HMRC tax information and impact note).
Frequently asked questions
Do I need to register for Self Assessment as a delivery rider or private hire driver?
Yes, if your gross income from self-employment (before expenses) is more than £1,000 in a tax year. If you are not already sending returns, register by 5 October after the end of the first tax year in which that gross income is over £1,000; if that year is 2026/27, the deadline is 5 October 2027. Below £1,000 you may still need a return for other reasons, so check on GOV.UK.
Can I claim 55p a mile as a self-employed driver?
For a car or van, yes: 55p a mile for the first 10,000 business miles in 2026/27 and 25p after that; 24p for a motorcycle. You cannot use it for a car designed for commercial use, such as a black cab, or for a vehicle you have claimed capital allowances on. The rate replaces fuel, insurance, repairs, hire and depreciation; parking and tolls are claimed on top.
Can I switch from the mileage rate to actual costs for the same car?
No. Once you use the flat rate for a vehicle you must keep using it for every later period in which that vehicle is used in the business (ITTOIA 2005 s.94D(4)). HMRC says you can change basis only when the vehicle is replaced. If you have claimed capital allowances on a vehicle, you can never use the flat rate for it.
Did the Uber Supreme Court case make drivers employees for tax?
No. In Uber v Aslam [2021] UKSC 5 the Supreme Court upheld the finding that the claimant drivers were workers under employment law, with rights such as the minimum wage and paid leave. It was not a tax decision. GOV.UK says your status in tax law may be different, and HMRC may treat someone as self-employed for tax even if they are a worker for employment rights.
Will the delivery or ride app tell HMRC what I earn?
Yes, if it is a UK reporting platform operator. Since 1 January 2024 such platforms collect your details and report what they paid you for each calendar year to HMRC by the following 31 January, and must give you a copy by the same date. The report does not replace your own records and does not by itself mean you owe tax.
Can I claim parking fines or speeding fines as an expense?
No. GOV.UK says fines and penalty charges cannot be claimed. Parking fees, tolls and congestion charges paid for business journeys are allowable, and HMRC says they can be claimed on top of the mileage flat rate because it does not cover them.
Do taxi and private hire drivers have to register for VAT?
Only if your own taxable turnover for the last 12 months goes over £90,000, or you expect your turnover in the next 30 days alone to go over £90,000. Whether app fares count as your turnover depends on whether the operator acts as principal (required in London) or as your agent, which operators outside London may do.