Self Assessment for taxi and private hire drivers, step by step

1. Register as self-employed

You must tell HMRC by 5 October if you need to send a return for the tax year just gone and you haven't sent one before. Tax years run from 6 April to 5 April, so if you started driving in, say, January 2026, that's the 2025 to 2026 year and the deadline was 5 October 2026. Tell HMRC after that and you could get a penalty.

Registered late? Do it now anyway. GOV.UK says HMRC will then give you a deadline 3 months from the date of its letter or email to send the return, but the tax is still due by 31 January. Once you're registered HMRC sends your Unique Taxpayer Reference (UTR), which you'll need for everything that follows.

2. Work out your income

You must send a return if you were self-employed as a sole trader and earned more than £1,000 before expenses. For a driver, your income is what you take in fares, however you're paid. GOV.UK also lists tips as untaxed income that can mean you need a return.

Keep a running record as you go rather than piecing the year together in January. GOV.UK says you'll need records such as bank statements and receipts to fill in the return correctly. The free income tracker logs fares and costs on your phone and totals them by tax year.

3. Take off your allowable expenses

You pay Income Tax on your profit: your income minus allowable expenses. GOV.UK's example is £40,000 turnover with £10,000 of expenses, leaving £30,000 taxable profit. Only business costs count, and money you take for yourself isn't an expense.

For car and travel costs, GOV.UK lists what a self-employed person can claim, including:

• Fuel
• Vehicle insurance
• Repairs and servicing
• Hire charges, which is where renting a car through your firm comes in
• Vehicle tax, parking and breakdown cover

It also says what you can't claim: fines or penalty charges, non-business driving, and travel between home and work.

Your phone. Phone bills count as office costs, but only the business share. GOV.UK's example: a £200 phone bill with £70 of business calls means you claim £70.

Licence fees and cleaning. The GOV.UK expenses pages read for this guide don't mention council licence fees or car cleaning by name. They say you can claim costs related to the business, and that if you're not sure whether something counts you should contact HMRC. Keep the receipts either way.

One catch: you can't claim expenses at all if you use the £1,000 trading allowance instead. It's one or the other.

4. Mileage rate or actual costs

For the car, you can either add up what you actually spent (fuel, insurance, repairs and so on) or use a flat rate per business mile, known as simplified expenses. You use one or the other for a vehicle, not both.

From Simplified expenses: vehicles, GOV.UK, read 14 November 2026. The return due on 31 January 2027 covers 2025 to 2026, so it uses the 45p rate.

Points from the same GOV.UK page that matter for drivers:

• Not for taxis built for the job. The flat rate can't be used for cars designed for commercial use, and GOV.UK names black cabs and hackney carriages. An ordinary car used for private hire isn't in that list.
• Once you pick it, you stick with it for that vehicle for as long as you use it for the business.
• Not if you've already claimed capital allowances on the car, or included it as an expense.
• Parking is extra. You can claim parking and other travel on top of the mileage rate.

Which works out better depends on your miles and your costs. GOV.UK has a simplified expenses checker to compare them. Either way, keep a log of business miles.

5. Payments on account

If your tax bill is £1,000 or more, HMRC usually asks you to pay towards next year's bill in advance, in two halves due by 31 January and 31 July. These are payments on account, and they include Class 4 National Insurance. You don't make them if last year's tax was under £1,000, or if you paid more than 80% of it outside Self Assessment, for example through a tax code from another job.

This is what catches new drivers out. In your first year with a bill of £1,000 or more, January brings the whole of that year's tax plus half again as the first payment on account. Set money aside from the start. You can also pay towards the next bill weekly or monthly by Direct Debit with a Budget Payment Plan, if you're up to date with what you owe.

6. File and pay by 31 January

For the 2025 to 2026 tax year, the online return and the tax are both due by 11:59pm on 31 January 2027. A paper return was due by 31 October 2026. If you want the bill collected through a PAYE tax code, the online return has to be in by 30 December 2026.

You can file any time after the tax year ends on 5 April, and GOV.UK points out that filing early tells you what you owe, gives you time to budget, and lets you set up a payment plan if you don't think you can pay on time. If you've already missed it, see missed the Self Assessment deadline?

Keeping it simple next year

Log fares and costs weekly in the free income tracker; it keeps everything on your phone and exports a CSV for your return or your accountant. If you'd like it on paper, the first-year tax pack (£9.99) has a receipts routine and a fuller list of what drivers usually claim, each point sourced. There's also a free one-page deadlines checklist.

Sources

• Check how to register for Self Assessment — GOV.UK (read 14 November 2026)
• Self Assessment tax returns — GOV.UK: who must send a return, registering, sending a return, deadlines (read 14 November 2026)
• Expenses if you're self-employed — GOV.UK: overview and car, van and travel expenses (read 14 November 2026)
• Simplified expenses if you're self-employed: vehicles — GOV.UK (read 14 November 2026)
• Understand your Self Assessment tax bill: payments on account — GOV.UK (read 14 November 2026)
• Pay your Self Assessment tax bill: pay weekly or monthly — GOV.UK (read 14 November 2026)