Taxi Drivers - Help!

samjocky

My OH is leaving the Services to become a self employed taxi driver. He will have a military pension. Will this be taxed at source, regardless of what he might earn as self employed?

Also - cars. What will he be able to claim back from the Taxman. He needs to buy a car on HP for this new job. However, he is looking at the 0% interest deals - will this be beneficial to him when it comes to tax? What comes with that, ie AA, insurance, oil etc etc - can he claim for that?

Grateful to any taxi driver (or otherwise!) for some basic help here.

pchelpman

samjocky wrote:

My OH is leaving the Services to become a self employed taxi driver. He will have a military pension. Will this be taxed at source, regardless of what he might earn as self employed?

Short answer is "yes".

He can choose to have his tax allowances - whatever they may be - set against his army pension. That will reduce the tax deducted inder PAYE as the tax year progresses but, of course, he will have tax to pay in his self employment profits when his accounts and Tax Return are filed some months later.

As a self employed person he MUST register with the Revenue within 3 months of starting otherwise he will face a fine.

To register phone 08459 154515.

samjocky wrote:

Also - cars. What will he be able to claim back from the Taxman. He needs to buy a car on HP for this new job. However, he is looking at the 0% interest deals - will this be beneficial to him when it comes to tax? What comes with that, ie AA, insurance, oil etc etc - can he claim for that?

Grateful to any taxi driver (or otherwise!) for some basic help here.

There are two types of "costs" here .... the running costs of the vehicce (fuel, insurance, road tax, maintenance, MOT, loan interest and so on) and the actual cost of purchasing the vehicle itself.

The running costs are deductible in the accounts but the purchase cost is "depreciated" over time. If used entirely for the business the allowance will be 25% of the cost in the first year (subject to a max. claim of £3000) then 25% per annum on the remaining unrelieved cost over time. Example ....

Year 1, cost, £19,000
25% (restricted to max.) 3,000
"unrelieved" cost at end of year 1 £16,000

Year 2, 25% allowance 3,000
(again restricted to max.)
"unrelieved" cost at end of year 2 £13,000

Year 3, 25% allowance 3,000
(again restricted to max.)
"unrelieved" cost at end of year 3 £10,000

Year 4, 25% allowance 2,500
(no need to restrict to max. from now on)

[....and so on on through the years with special calculations needed in the year of disposal].

Hope this helps.

4nick8

As I guess the majority of his income will be in cash he must keep an accurate record of his daily takings. I would also back this up with a record of the mileage travelled. Also, for say a month, keep a log of the engaged mileage, and any private mileage. This can be produced if he is subject to an HMRC enquiry.

Don't forget to record the tips received as they are taxable too.

creditcardking_2

He should really talk to some other taxi drivers, from what I have heard taxi drivers tend not to declare much of their earnings since its usually a cash transaction that occurs and at least 3 customers per night run off without paying the fare.

pchelpman

creditcardking wrote:

He should really talk to some other taxi drivers, from what I have heard taxi drivers tend not to declare much of their earnings since its usually a cash transaction that occurs

This is an extremely dangerous game to play. The Revenue are anything but stupid. They know full well what income they expect to see in a taxi driver's declarations. If the declared amount doesn't reach expected levels they can launch an investigation without any more provocation.

creditcardking wrote:

...at least 3 customers per night run off without paying the fare.

No problem. The Revenue don't want to tax anyone on money they haven't received. If a driver doesn't get paid for a job he has nothing to declare in that instance.

gizmos

pchelpman wrote:

This is an extremely dangerous game to play. The Revenue are anything but stupid. They know full well what income they expect to see in a taxi driver's declarations. If the declared amount doesn't reach expected levels they can launch an investigation without any more provocation.

No problem. The Revenue don't want to tax anyone on money they haven't received. If a driver doesn't get paid for a job he has nothing to declare in that instance.

I agree there was a case of a taxi driver near me hitting the papers in the last few weeks for not declaring his earning. He now owes £11k in back tax etc and thats just from three years, not only does he have to pay that back but was also sentenced to something like 100 hours community service which of course means you cant be earning during that time. It's not worth it - do everything correctly and you have nothing to worry about. Is it really worth it for say £50 a week extra??

elaine373

The revenue can be quite judgemental on taxi drivers. My husband is a self employed taxi driver and has a tough last couple of years. He had his black cab re-possessed because the payments were too high. He now does less hours due to stress of the job and ill health,( the tax man may question this but its true) but has been luckily enough to buy another car and pay back the money weekly.He was under reveiw 2 years ago with the inland revenue as it was known as then, This was to do with the mileage and whether it was travel to work or work miles) We wouldnt cope if it wasnt for the tax credits that we receive.I advise any self employed person to keep every receipt,detail and count for every penny. In fact start and keep your business records ready for whenever the tax man wants to look at them (highly likely with a taxidriver) This shouldnt be hard if you keep on top of it.
some drivers make alot of money, we are barely keeping our heads above water, mainly due to the fact that my husband doesnt feel safe any more at nights and is sick of the alcohol influenced customers.so is earning less than he used to. He prefers to do his hours in the day when there is less chance of runners etc. Not all taxi drivers are fraudsters.