Tax Guide: self-employed delivery drivers

Self-employed delivery drivers are heavily on the rise with courier work becoming one of the most popular part time side hustles in the UK!

Whether you deliver just 1 day a week or 7 days a week, we can help with our guide to filing a tax return for self-employed delivery drivers.

The absolute basics

First of all, what is a tax return? It’s basically a method of declaring and paying tax on any untaxed income you’ve earned. 

A Self Assessment tax return is something that you do as a sole trader, but the process is different if you’re a limited company.

When you pay tax?

You owe tax based on your earnings each tax year. The tax year runs from 6th April to 5th April, so you should record what you make between these dates every year. 

You will then pay your tax return by 31st January the year after the tax year you’re paying for. Confused? Here’s a breakdown!

• You start delivery driving 1st May 2023
• You’re working in the 2023/24 tax year
• By 5th October 2024, you will have to register for Self Assessment
• By 31st January 2025, you must file your tax return

What can go on my tax return?

Any self-employed income! Mainly how much you’ve earned, and what kind of income it is (e.g. self-employed, rental income, capital gains, pension payments etc).

If you’re an employed courier, you won’t have to submit a tax return

What can I expense as a self-employed delivery driver?

Anything that you buy wholly and necessarily for work can be deducted from your end-of-year total earnings! That way, you’re only paying tax on your profits. 

But what counts as an expense? Here are a few examples:

• Marketing costs
• Expenses
• Parking costs (but not fines)
• Accounting costs
• Car lease payments
• Bike equipment (if you deliver by bicycle)
• Mileage
• Insurance and repairs
• Breakdown cover
• Work phone bill payments (if you use it exclusively for work)
• Road safety equipment

Make sure you keep receipts (VAT receipts if possible) so that you have evidence of the spend. HMRC may not ask you for them but it helps to have in the case that they do!

I have substitute workers, do I still pay tax?

Unfortunately, you’ll still be liable to pay tax if you have substitute workers. As a sole trader, all the income of your business is presumed to be yours. So you should work out an agreement with anyone who substitutes for you. 

HMRC will not be involved in this process. 

Does my vehicle affect the tax I owe?

Actually, yes. Not all vehicles are created equal. So, the greater your carbon emissions, the less tax relief you’ll be able to claim back!

As you can imagine, delivery drivers who use bikes are entitled to the biggest tax relief! 

You can claim either one of these two reliefs:

1. Mileage Allowance
   1. Cars ➡️  45p per mile for first 10,000 miles then 25p
   2. Vans ➡️  45p per mile for first 10,000 miles then 25p
   3. Motorbikes ➡️  24p per mile
   4. Bikes ➡️  20p per mile
2. Capital Allowance – this is a percentage of every cost

Claiming mileage?

Give our Mileage Allowance calculator a whirl. Work out what you could claim per tax year for your vehicle.

Any questions?

Don’t hesitate to get in touch if you have any questions about how to do your tax return. They’re more than happy to help!