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7 tax tips that every Deliveroo rider should know

  • 4 min read
  • 29 Jun 2022
7 tax tips that every Deliveroo rider should know

When you’re a Deliveroo rider, you may not think about paying tax on what you earn. But when you earn over a certain amount, it’s your responsibility to let HMRC know that you have untaxed income. 

It can seem pretty complicated at first, but never fear, TaxScouts is here to break it all down step-by-step and to help you avoid getting stung by penalties. There are a lot of things that people don’t know about when it comes to taxes.

  • Do you know what taxes you owe?
  • Do you know how they’re worked out?

Here are our top seven tips that we think all Deliveroo riders should know about before taking on your taxes. 

1. Work out your employment status

So, what even is your employment status? It’s determined by more than just whether or not you have a job. You can be:

  • Employed (by an employer)
  • Self-employed
  • Employed and self-employed
  • Running a hobby business
  • Unemployed

As a Deliveroo rider, you will most likely either be self-employed or employed and self-employed. If you work for Deliveroo alongside a full-time job, this will mean that you’re employed and self-employed.

If you do not have a full-time job and either get all of your income from Deliveroo or your income is made up of a selection of roles (e.g. courier driving, selling on Depop etc.), you’ll have to declare your income to HMRC and most likely do a tax return.

2. Get it on a spreadsheet

This may seem obvious but it’s super-important. Doing your taxes can get very complicated, especially if you’re doing it all in a mad rush at the end. A good way to stay organised is to keep an online record of your finances on a yearly spreadsheet. Split the sheet into monthly tabs and organise each tab into income and expenses. 

That way, when it comes to giving the information to HMRC, you’ll be able to pull it quickly and without the big risk of having made a mistake. 

3. A business account could change your life

True story. Similar to the spreadsheet tip, getting a business account is a good way to help you stay organised. It enables you to split your personal expenses from your business ones, so when it comes to you doing your tax return, you won’t be sifting through massive bank statements manually. 

There are loads of options for business accounts nowadays, many of them free for basic services. Check out our partners at Monzo Business and Money Dashboard – and you can even get a discount on your tax return too!

4. Know what you can and can’t expense

Expenses are a point of much confusion for the self-employed workforce, no matter how long you’ve been part of it. So let’s start with the basics. How does it work? When you pay your tax bill, you’re allowed to deduct any business expenses from your overall earnings so that you’re only paying tax on your profits.

The general rule when it comes to your expenses is that whatever you deduct must be wholly, exclusively and necessarily for your business:

For example, you could expense petrol you used whilst driving to deliveries or bike repairs; you can’t expense the cost of the motorbike or bicycle.

Check out more details about expenses.

5. Some tax reliefs mean you might not actually owe tax

As we said before, the tax that you owe can vary depending on your employment status. Generally speaking, we all have to pay in the 2024/25 tax year:

  • Income Tax
    • 20% on income <£50,270
    • 40% on income >£50,271
  • National Insurance
  • Class 4: 6% of profits over £12,570 (2% over £50,270)

But when you’re both employed and self-employed, you can earn up to £1,000 of tax-free self-employed income via the Trading Allowance. 

🚨From 6 April 2024 (the 24/25 tax year onwards), Class 2 National Insurance is being scrapped. If you’re under the threshold and pay them voluntarily to qualify for benefits, you’ll still be able to do so.

At the same time, Class 4 National Insurance will decrease from 9% to 6%.

6. Understand the tax year

Just to be complicated, the tax year doesn’t run from January to December like our calendar year. It goes from April to April instead. This means that if you do owe tax on your Deliveroo income, you’ll work it out based on what you earned between 6th April and 5th April every year. 

You then pay what you owe by the following January. 

7. You have to register your Deliveroo income

You have to let HMRC know that you’re earning untaxed income. To do this, you do what’s known as a Self Assessment by 5th October.

Do this at HMRC online here.

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