Tax for taxi and private-hire drivers

If you drive a black cab or a private-hire car, you're almost certainly self-employed — which means Self Assessment now, and Making Tax Digital soon. Here's what to claim and what to expect.

As a self-employed driver you pay tax on your profit — your takings after allowable costs — not on everything that comes in. If you earned more than £1,000 from driving in the tax year, you'll need to file a return.

How much tax will you actually pay?

You're taxed on your profit — your income after allowable costs — not on everything you take. For the 2026/27 tax year:

• The first £12,570 is tax-free (your personal allowance).
• 20% income tax on profit between £12,570 and £50,270.
• 6% Class 4 National Insurance on that same slice — Class 2 is treated as paid automatically.
• Above £50,270 it steps up to 40% tax and 2% National Insurance.

A worked example. Say you take £30,000 and, after mileage or running costs, licence and app fees, your profit is £22,000 — your only income. Nothing on the first £12,570, then 20% tax on the £9,430 above it (£1,886) and 6% Class 4 NI (£566) — about £2,452 for the year.

If you also have an employed job, that salary usually uses your personal allowance first, so more of your self-employed profit is taxed — we work out both sides together. Our how-much-tax guide has the full breakdown.

Your car: two ways to claim

You pick one method per vehicle and stick with it:

• Simplified mileage — a flat rate of 55p per mile for the first 10,000 business miles and 25p after. Simple, and it already covers fuel, servicing and wear.
• Actual costs — fuel, insurance, repairs, servicing, tyres, road tax and so on, plus capital allowances on the vehicle itself. More paperwork, but often better for a car doing high mileage.

Costs specific to driving

• Your taxi or private-hire licence and vehicle plate fees.
• DBS checks and medical assessments needed to keep your licence.
• Circuit, dispatch or app fees — including the commission apps like Uber or Bolt take.
• Vehicle cleaning and valeting.
• Your work phone and data.
• Accountancy fees — including ours.

How to file, step by step

• 1. Register with HMRC for Self Assessment by 5 October after the tax year you started. You'll get a UTR (Unique Taxpayer Reference). Here's how →
• 2. Keep records through the year — what you earned, and receipts for what you spent.
• 3. File your return online by 31 January (or on paper by 31 October). The dates that matter →
• 4. Pay what you owe by 31 January.

Making Tax Digital

Making Tax Digital is already here: since 6 April 2026 it applies if your gross self-employment and property income — your turnover, before expenses — was over £50,000. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028. It means keeping digital records and sending HMRC a short update every quarter — 7 August, 7 November, 7 February and 7 May — on top of your year-end return. That's exactly the sort of thing we take off your plate.

Common questions

Do taxi drivers pay tax? Yes — taxi and private-hire drivers are almost always self-employed, so if you earn over £1,000 in a tax year you file a Self Assessment return and pay tax on your profit.

Should I claim mileage or actual costs? You pick one per vehicle. The 55p-per-mile simplified rate (first 10,000 miles, 25p after, from April 2026) is simple and covers fuel and wear; actual costs can be better for a high-mileage car. You can't claim both.

How much tax will I pay? No tax on the first £12,570, then 20% tax and 6% Class 4 National Insurance on profit above it. On £22,000 of profit that's about £2,452 for the year.

This guide is general information, not personal tax advice. Figures are for the 2026/27 tax year and can change at each Budget — always confirm the current numbers on GOV.UK or ask us to check your situation.