As a taxi driver, understanding the costs that can be claimed on your taxes is crucial for maximising your income and minimising your tax liability. This guide provides an extensive list of expenses taxi drivers can claim, demystifying the complex world of deductible expenses.
As a taxi driver, you are considered self-employed for tax purposes. This means that you need to register for self-assessment with HM Revenue & Customs (HMRC), keep meticulous records, and produce yearly accounts. Understanding the array of deductible expenses available to you can be complex. In this guide, we shed light on these intricacies, exploring the list of expenses taxi drivers can claim on taxes. If you’re unsure about how to go about becoming a self-employed taxi driver then read our helpful guide.
The backbone of being a self employed taxi driver is your vehicle. Consequently, many of the costs associated with owning, operating, and maintaining your vehicle can be declared as expenses.
If you manage your taxi business from an office, whether at your home or a separate location, certain administrative costs can be deducted.
Beyond vehicle and office expenses, there are several other costs that you can include in your list of expenses taxi drivers can claim.
If you're a taxi driver, you are running your own business and have significant capital expenses, like the cost of your vehicle. Capital allowances are a way of obtaining tax relief on some of the assets you purchase for your business. They allow you to deduct some or all of the value of the asset from your taxable profits, thereby reducing your tax bill.
A capital allowance can be claimed for the cost of your vehicle and other assets used in your taxi business. For most vehicles, the rate is 18% per annum. However, traditional Hackney Carriages, or black cabs, are eligible for a 100% Annual Investment Allowance (AIA).
This can be a substantial benefit for taxi drivers, considering the high costs associated with purchasing, running and maintaining a taxi. However, claiming capital allowances can be a complex process with many rules and exceptions, so it's important to seek professional advice to ensure that you're not missing out on any potential savings. The HM Revenue and Customs (HMRC) website provides comprehensive information.
Taxi drivers can claim mileage expenses using one of two methods:
While the simplified expenses method may be more straightforward, listing individual expenses can often result in larger deductions.
Insurance is a significant expense for taxi drivers, but it's also a necessary one. Fortunately, the cost of your taxi insurance can be claimed as a taxi driver expense, helping to reduce your overall tax bill. Remember to renew your taxi insurance with Taxi Insurer today!
If you use your taxi for personal purposes as well as for your business, you'll need to account for this when claiming expenses. For instance, if you use your taxi 20% of the time for personal use, you should reduce your vehicle-related expenses by 20%. Check out our blog on common problems taxi drivers face and how to avoid them.
Good record keeping is essential for claiming your business expenses accurately. It's recommended to keep records of your income and expenses for at least six years. Records can be kept in a simple cashbook, on a spreadsheet, or using specialised bookkeeping software. This will eventually help with your self assessment tax return.
Understanding the list of expenses taxi drivers can claim on taxes is vital for maximising your income and ensuring your tax return is accurate. While it may seem daunting, with careful record keeping and a clear understanding of allowable expenses, it becomes a manageable part of running your taxi business. For those in need of further assistance, professional accountants are available to guide you through the process and ensure you claim all the expenses you're entitled to.
Remember to renew your taxi insurance with Taxi Insurer today! Call one of our friendly insurance specialists on 0192 645 4929 or click here to get a quote.
Your understanding of the list of expenses taxi drivers can claim will have a direct impact on your financial success as a taxi driver. With this guide, you'll be well-equipped to navigate the world of deductible expenses and claim what you're entitled to.