We sort your Self Assessment for you. £119, all in.

Fast, effortless and 100% online.

We sort your Self Assessment for you. £119, all in.

Tax Guide: self-employed delivery drivers

11th March 2021

Delivery driver tax basics

As a self-employed delivery driver, your delivery income may be a side hustle for you. It’s a popular side hustle in the UK as a result of the growth of online apps – and the pandemic has only increased this further. Or perhaps instead, you’re a seasoned full-time driver? However you work, we can help.

Tax is a sticking point for newbies and experts alike. And doing a tax return is dreaded by many. If you’re looking for the basics of doing a tax return as a self-employed delivery driver, you’re in the right place. Keep reading!

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. Another way of describing a tax return is a Self Assessment. 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. (Pun not intended.)

  • You start delivery driving 1st May 2021
  • You’re working in the 2021/22 tax year
  • By 5th October 2022, you will have to register for Self Assessment
  • By 31st January 2023, you must file your tax return

What can go on my tax return?

You may work for more than one delivery app. But how should you include this on your tax return?

Basically, no matter where you work, if you’re earning self-employed income, it all comes under one umbrella. HMRC won’t need to see who you work for. They’re only interested in how much you’ve earned, and what kind of income it is (e.g. self-employed, rental income, capital gains, pension payments etc.). 

Interestingly, some benefits that you claim might also be taxable. This includes things like Employment Support Allowance (ESA) or Job Seeker’s Allowance (JSA), although you’ll only be taxed if you’re claiming these benefits because of National Insurance contributions. If you’re means tested, these benefits won’t be taxed. 

Either way, when it comes to filling in your tax return, you won’t need to include these benefits. Even though they’re part of your income, HMRC will be aware of them because of their links with the Department of Work and Pensions (DWP). 

Expenses

If tax is a point of confusion, expenses are the black hole that resides within it. So many people find the idea of expenses difficult to get their heads around – and who can blame them?

The basic rule is, 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

When it comes to claiming this, make sure you keep receipts (VAT receipts if possible) so that you have evidence of the spend. HMRC shouldn’t ask you for them. But if you’re investigated, you will need everything. And we mean everything from the previous 22 months. 

Substitute workers

If you get a substitute to work for you in your place, what does this mean for the tax liability? Unfortunately, you’ll still be liable to pay the tax. 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. The more environmentally-friendly your vehicle, the more tax efficient it is. This means the greater your carbon emissions, the less tax relief you’ll be able to claim back.

So if you ride a bike for your deliveries, you’ll be entitled to the biggest tax relief. At the other end of the scale is a car, where you’ll be taxed more heavily for driving one. 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

The pandemic

From 2020, many of us had our income reduced as a result of the economic impact of the pandemic. But because of the way HMRC collects tax payments, you may be due to be overcharged in January or July 2021. Even if you’re not, you may still be struggling to pay owing to financial difficulty. 

If this affects you, make sure you get in touch with HMRC as early as possible. They are allowing people to split their payments into smaller instalments via a Time to Pay scheme. 

Any questions?

Don’t hesitate to get in touch with our support team if you have any questions about how to do your tax return. They’re happy to help. Alternatively once you’ve signed up, your certified (and friendly!) accountant will guide you through everything step-by-step to help you get your tax return filed.

Want regular tax tips from us?

Sign up here for important updates, deadline reminders and basic tax hacks sent straight to your inbox.

"*" indicates required fields

We sort your Self Assessment for you. £119, all in.

Fast, effortless and done for you online – the way tax returns should be done. Free to sign up.