A lot of new immigrants, students and other people who are looking to make some extra money are taking up Uber as a source of additional income.
In Uber, the drivers are called the partners and are treated as self-employed. A full time uber driver can make an average of £31,000 according to indeed an employment related website. Such drivers should register themselves with HMRC and fill in the self-assessment tax return. The deadline for submitting the self-assessment tax return is 31 January 2019.
While some drivers are driving full time there is a percentage of drivers who are driving Uber only for some extra cash. Since there is no requirement for the minimum number of hours that the Uber driver needs to drive some of them do it once a week or even once a month. Some are only doing the weekends and earning about £10-12 per hours. This means if these drivers are not earning more than £1,000, they will not have to register themselves for self-assessment.
Recently a part time Uber driver approached Taxaccolega, London accounting firm based in Croydon regarding self-assessment. She was driving Uber only on the weekends. Which means that they she was working few hours per year. In tax year 2017-2018 her income was £900 which was less than £1000, meaning that she was entitled to the HMRC trading allowance.
If she claimed trading allowance, she couldn't deduct any allowable expenses or claim any other allowances.
The allowable expenses are the expenses which will reduce your tax bill. Some examples of the expenses that the uber driver can claim are mileage claim- you can claim this allowance if you own a car, car purchase, car lease payments, uber commission and service charges, tolls and parking charges, business usage of the phone, accountant fees, vehicle and public liability, car cleaning, bank charges.
However, you should note that an allowance cannot be used to create a loss. It is necessary to register yourself for self-assessment and file tax returns if you want to claim losses. For example, if your trading income is £900 and your expenses are £1000. you don't need to tell HMRC about the income. However if you want to claim the loss of £100 you will have to register for self employment and fill the self assessment tax return.
My client could still register herself for self-assessment voluntarily to make voluntary class 2 National insurance payments to help qualify for the benefits. To understand more on the benefits go to the website: https://www.govits.uk/national-insurance/what-national-insurance-is-for.
A person who is an employee with an employer and is also self employed with Uber as an Uber partner they should pay taxes to HMRC differently.
While working with Uber part time its easy additional cash without the tax hassle however, if an uber driver wants security under medical cover, maternity pay the Uber drivers must have completed 150 trips in the previous eight weeks to be eligible to receive the off-trip specific benefits and drivers who work for the organisation's Uber Eats arm must have completed at least 30 deliveries in the past eight weeks to qualify.
Whether you should register with HMRC or not voluntarily depends on your individual situations. We at Taxaccolega can help you with it.
To understand more on how to pay taxes as an Uber driver, you can contact Taxaccolega and we will deal with your issues.