I am going to help all you hard working delivery and Uber drivers answer a really popular question, Do Ubereats and Uber Drivers Pay Tax In The UK?
This is one of the major mis-understandings self employed drivers have about working in the gig economy.
This post is going to set out to answer some of the questions you may have, ensuring you are more informed, and most importantly working legally in the UK.
Does Ubereats and Uber inform HMRC?
The short answer is yes. With such a large number of people now working in the gig economy – managing two or maybe three self employed jobs at one time – it was only a matter of time before HMRC started asking questions as to why Joe Bloggs was no longer paying any tax.
Uber also have a responsibility to notify HMRC who are working for them and upon request have to provide details of riders and drivers.
The one caveat is HMRC have limited resources and may not be able to investigate everyone, but increasingly people are being investigated years after the period they were working, resulting in major fines as well as having to pay back unpaid tax.
How much do Ubereats drivers get paid?
A recent post on my blog did a comparison of Ubereats, Deliveroo and Justeat income in the UK, and showed that drivers could earn between £7-14 per hour. This of course is dependent on location, time of year and the number of drivers available.
So someone working for Ubereats could earn £500+ per week when working busy periods such as weekends, as well as spending 40+ hours per week on the road.
Are Ubereats drivers self employed?
Yes, Ubereats drivers are classed as self employed which means you have to register with HMRC and submit a tax return at the end of each tax year, which declares any income you earn over £1000.
Do Uber and Ubereats drivers pay tax?
Uber and Ubereats drivers in the UK are self employed and therefore must be registered as self employed and pay tax at the end of the tax year. This is because Uber does not withhold taxes from the income you earn as a driver, which is why you require an accountant to submit a tax return to HMRC.
How much tax do I pay on £12,000 Income?
If you earn up to £12,000 you will not have to pay any tax. This is because you have a personal tax allowance of £12,570 which means you don’t pay tax on this amount. Once you earn over £12,570 tax may be due.
One of the misconception self employed people have is because they don’t earn over £12,570 they don’t have to be registered as self employed and file a tax return. This is completely false and you must registered as self employed and file a tax return on income under £12,570.
Does Ubereats pay drivers fuel?
No. It is the responsibility of Ubereats and Uber drivers to pay for their own fuel. This is classed as a business expense, and is tax deductible.
Can I write off my car payment if I drive for Uber?
The vehicle you use to make deliveries or take on passengers is classed as a business asset and means a proportion of costs associated with it are tax deductible. This includes insurance, vehicle tax and maintenance and repairs. For more information about what expenses can be claimed please click the link.
How do I avoid paying taxes with Uber and Ubereats?
If you want to avoid paying tax on income your earn you simply don’t submit a tax return to HMRC. This approach is very risky and may result in you being investigated later if your not able to explain why you have not declared income or paid any tax or national insurance contribution.
A less risky approach would be to either set up as self employed or have a limited company and declare your income this way. This is because you can use the products and services you buy to do your job to reduce any tax that might be due. for example the car rental payments each month will be used to reduce any tax that is due. It is possible that someone earning £18,000-£28,000 per year may not have to pay tax on this income.
What happens if you don’t report Uber income?
You will be investigated by HMRC for unpaid tax and may be prosecuted and in some cases you can be imprisoned. A majority of the time, if you are found to have not paid tax on your income you will be expected to pay interest and large penalties on top of any outstanding tax.
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How does Uber eats driver show proof of income?
If you need to show proof of income you earned working for Ubereats the best way to do this is to file a tax return. This can be done by yourself or by an accountant.
Is Ubereats a good side job?
If you have a full job but want to earn a little bit of extra cash on the side, Ubereats is a perfect option especially as you can simply deliver food on bicycle.
You can also work for Ubereats using your car or motorcycle, but ensuring you have the right insurance cover is always important. Zego Insurance is a company that offers insurance cover for delivery drivers. The great thing is you only pay for cover whilst your signed into the Ubereats app so you don’t have to pay for annual cover.
Can I work for Uber Eats and have a full time job?
This is an incredibly popular question and the short answer is yes. Many people who have a full time job also work for Uber or Uber Eats in their spare time.
If you are employed by an employer the good news is that the salary you earn through PAYE means your Tax and National Insurance contributions are taken care of.
However, if you decide to work for Uber or Uber Eats the income you receive is untaxed and must be declared to HMRC.
You must register as self employed and file a tax return each tax year. I recommend you speak to Ugo Tax who specialises in self employed delivery driver tax returns.
Need Tax Advise?
Are you confused about paying tax on your Deliveroo pay? We can help you with registering as self employed and filling your tax return.
Benefits of working for Uber and Ubereats?
One of the major benefits of working for Uber is the option to choose when you work. Choosing when to start and finish is really helpful if you have children and need to manage childcare. You may also have a full time job and want to earn a bit of extra cash on the side, so working in your free time can be as easy as simply logging into the app.
Another benefit to working for Uber is that you may already have a vehicle that can be used for food delivery or driving passengers. If you are using a bicycle for food delivery this is going to be a quick way of starting to earn some extra cash delivering food with Uber Eats without the need for insurance. If you want to use a scooter or car to make deliveries you will need hire and reward insurance. The same applies if you want driver passengers with Uber. If you have insurance in place a the moment you may want to speak to your insurance provided to see what options you have.
As we have already mentioned you have to file a tax return each year to HMRC, which basically tells them how much money you earned from Ubereats and Uber. A benefit of filling your tax return each year is that you can claim back expenses you have which relates to your work, and reduces your overall tax bill. Some example include; Vehicle servicing, protective equipment or parking meter charges. You can learn more about what you can claim by reading this post about 15 Expenses Ubereats And Uber Drivers Can Claim here.
Do you have to pay tax on tips?
Earning tips is definitely one of the perks of the job whether you are delivering food or taking passengers. However a popular question is do you have to pay tax your those tips?
The answer is Yes, you do have to pay tax on any tips that you earn while working for Uber.
This post about do Ubereats drivers have to pay tax in the UK is part of a series of posts I have written about gig economy workers. Can I suggest you read another post about What expenses can an Ubereats Driver claim as part of their tax return.
If you are thinking of working for Deliveroo you might like to read this post about Deliveroo Pay: how much can you earn and how to get started?.
If you need help with registering as self employed or need to file a tax return we recommend you contact Ugo Tax.