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How to pay tax as a Hermes self-employed courier

We've updated this guide on 5th March 2021

If you’re a Hermes self-employed courier, you may already know that you have to pay tax on any income you earn. You do this by submitting a tax return to HMRC, which is a legal requirement if you’re self-employed. 

This type of tax return is called ‘Self Assessment,’. You complete one every tax year, and deduct tax yourself from your courier earnings.

I’m a Hermes self-employed courier, I need help!

You might already have a basic understanding of what a tax return is. But, what you might not know is the process behind filing your tax return and how to calculate the amount of tax you need to pay. 

In the eyes of HMRC Hermes, couriers are classified as self-employed. There’s a lot of debate still going on in government about whether drivers are self-employed, or an employee of a company making them entitled to workers’ rights. Regardless of the debate, it helps for you to be up to date when it comes to your tax return.

HMRC requires you to complete a Self Assessment tax return if you are:

  • A sole trader
  • A director of a limited company – or the director and the only employee of a limited company
  • Receiving income that is not taxed at source

What will I be taxed on?

HMRC will tax you on your profits each tax year in the following three ways:

  1. Income Tax: you’re taxed at 20%, 40% or 45%, depending on how much you earn
  2. Class 2 National Insurance: this is a flat rate charge of £159 that you owe if you earn over £6,515
  3. Class 4 National Insurance: this is a percentage charge (9%) on your earnings if they exceed £9,568 per year

Like any other self-employed job, it’s important to keep records of all your earnings, as well as a record of all your fares and tips. We have a handy self-employed calculator to help you work out what you will owe.

What about expenses?

One of the perks of being a Hermes self-employed courier is that you’re able to claim back some of your tax on business expenses. Any expenses that you have incurred which are ‘wholly and exclusively’ for your work are tax deductible. This includes:

  • Fuel costs
  • The cost of repairs, servicing and running of your vehicle
  • The costs of your annual road tax and your MOT test
  • The cost of cleaning your own vehicle
  • Interest on any bank or personal loans taken out to purchase your vehicle
  • Your license and any other registration fees
  • Car insurance
  • Breakdown recovery membership fees
  • Phone usage for business use
  • Parking & toll charges

Be aware that if you use the same vehicle for your own personal use then you’ll need to factor this in when any expenses are claimed. If you work out that you use your vehicle 40% of the time for personal use, then you would need to reduce any relevant vehicle running expenses by 40%.

How can I sort my Self Assessment tax return?

There are three different options that you can choose between:

  1. Do it yourself via HMRC
  2. Look for online help (like TaxScouts!)
  3. Hire an accountant

If you decide to sort your tax return yourself, be aware that the fines for making mistakes can be pretty hefty! It’s always helpful to seek expert accounting advice when completing your Self Assessment!

If you’re a Hermes self-employed courier, you must register for Self Assessment with HMRC here before the deadline. You have until the 5th October in any given year to do this.  

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