Do Ubereats Drivers Pay Taxes In The UK?

If you are keen to learn whether or not Ubereats drivers pay taxes in the UK, you should read the following blog post that discusses this very topic. For a detailed overview, we will explore how and why taxes are applied to an Ubereats driver’s income and review the process they need to undertake to pay their taxes in the UK.

Do Ubereats Drivers Pay Taxes In The UK?

Yes, Ubereats drivers pay taxes in the UK. If you are an Ubereats driver in the UK, you will be required to file your tax returns and pay your income tax through the self-assessment method. This means that you will not be assigned a tax code under the PAYE tax system; nor will Ubereats be required to deduct your income tax as an employer and forward the payment to the HMRC.

When you pay your taxes as an Ubereats driver, you will have to file for a tax return with the HMRC. During your lf assessment,  the first £1,000 of your income is disregarded for taxes. In addition to their income, Ubereats drivers also need to add the tips that they get for their income tax calculation.

You can deduct all work-related expenses from the remainder of your income. The amount you are left with is your taxable income for which you will file your tax returns.

This means that you should maintain a record of all the business-related expenses you incur so that you can deduct them from your earnings when you apply for tax payments through self-assessment.

If you fail to file your self-assessed tax return, the HMRC can investigate your situation based on suspicion. If anyone is found guilty of tax evasion, they can be fined with penalties or even a prison sentence.

If you have not paid your taxes unintentionally, you can report your situation to HMRC as soon as you realise that you have unpaid taxes. In this case, chances are high that you will not be prosecuted. Additionally, if you cooperate during the investigation, you can also avoid being penalised with hefty fines.

How Do Ubereats Drivers Pay Taxes?

If you are an Ubereats driver, you should first get yourself registered with the HMRC. They will then issue a Unique Taxpayer’s Reference to you via post. 

This is a ten-digit set of numbers issued by the HMRC to individuals and businesses who qualify for paying tax returns in the UK. You will find this number on the front page of the tax return (form SA100 or CT600). 

You can use this UTR number to file your taxes by 31st January using your Government Gateway ID.

If you are filing a tax return for the first time, you need to register with the HMRC Government Gateway user ID. You will write differently depending on which of the following classifications:

• you are a self-employed or a sole trader
• you are not self-employed
• you are registering a partner or partnership

Once you have registered, you can choose to file your tax returns by making an online payment.

If you want to check the amount of tax you should be paying during your self-assessment you can use this Uber Tax Calculator. However, it would be best to seek the advice of a legal or financial adviser so that the details filed during your self-assessment are accurate and you are neither faced with underpaid taxes nor with overpaid ones. 

How Do You Know That You Should File Your Tax Returns For Being Self-Employed?

If the nature of your work falls into any of the below criteria, you will be considered self-employed and will have to file your tax returns under self-assessment:

• manage a business and its decisions on your own
• take risks and responsibility for the success or failure of the business
• have various customers at the same time
• have the authority to decide how, where and when you do your work
• hire other people to work for your
• organise equipment to manage work related tasks
• take responsibility for completing unfinished or unsatisfactory work on your own time
• charge a certain price from customers for the work you do
• trade goods or provide series to make a profit

Which Documents Do You Need To File Your Tax Returns Under Self Assessment?

Before you start with your self-assessment tax returns, you must make sure that you have the following documents available:

• your National Insurance number
• your ten-digit Unique Taxpayer Reference (UTR)
• your Government Gateway ID
• details of your untaxed income from the previous tax year (this includes income from rental income, dividends from shares, interest on savings, and capital gains)
• expense details related to self-employment or partnership status (receipts/invoices/bank statements)
• tax-free/relieved charity contributions
• P60 or other records with details of your income and paid taxes (if any)
• pension income and pension contributions
• redundancy payments or employee benefits

Once you have all the necessary documents ready you can file a self-employed tax return to pay your taxes through a self-assessment. 

How Do Ubereats Drivers Deduct Expenses From Earnings To Pay Taxes?

If you are an Ubereats driver who needs to pay their taxes through self-assessment, you will need to deduct business expenses from your earnings.

These expenses can be divided into car-related expenses and ride-related expenses which are classified as follows: 

Conclusion:

The above discussion brings us to the conclusion that Ubereats drivers do pay tax on their income. Since they are classed as self-employed individuals, Ubereats drivers will not pay their taxes under the PAYE system and will need to file their tax returns under self-assessment.

References:

What can you claim on your taxes for Uber? – TaxScouts.

Do Ubereats and Uber Drivers Pay Tax In The UK in 2022?

How Do Uber Drivers Pay Taxes in the UK?