What Is Self Employment?
Being self employed means that you work for yourself rather than somebody else. What this means is that working for Deliveroo you are not guaranteed work, a consistent number of hours or salary. This can be quite appealing to some people as working as self employed means you can work flexibly, and choose whether or not you want to accept or decline a job. This flexibility is what makes this type of work so attractive as you are in control, and should you choose, you can also work for other companies.
You have other responsibilities as well such as providing your own mode of transport, mobile phone and other equipment to help facilitate deliveries. You are also responsible for registering as self employed, working out your own taxes, and sending a tax return to HMRC.
What Taxes Does A Deliveroo Rider Need To Pay?
A Deliveroo rider will have to pay income tax and and two types of National Insurance (Class 2 and Class 4) on money which they earn. Earnings can be defined as your Deliveroo Income less expenses and any other allowances you are entitles to.
- Class 2 National Insurance is paid as part of your Self Assessment and entitles you to benefits such as the state pension when you reach retirement.
- Class 4 National insurance once again is paid via Self Assessment tax Return. The amount you pay may differ and depends on profits you make from your earnings.
There is a misunderstanding among self employed Deliveroo riders that the money they earn is tax free. This is not the case, and you must register with HMRC and declare your earnings. The good news is that the money you earn may be tax free however you still need to declare everything by completing a self assessment tax return to HMRC.
Read MoreHow much does Deliveroo pay?
However, you only need to register and pay tax on your Deliveroo income if you earn more than £1,000 in a tax year (6 April to 5 April). If you make less than £1,000 from Deliveroo then it’s tax free. This is great as it means that if your unsure of whether or not to take the plunge and start working for deliveroo, you can trial it and earn a small amount on the side. This is called the HMRC Trading Allowance.
How To Register As Self Employed
So you love the idea of choosing when and how long to work, and see yourself earning a living with Deliveroo, what next? If you plan to earn more than £1000 you will need to register with HMRC.
- When: The Tax year runs from 6th April to the 5th April the following year, and you must register with HMRC by 5th October in the second tax year. e.g. You start with Deliveroo on 21st February 2018 (Tax year 1). This means you will need to register with HMRC by the 5th October 2018.
- How: You can register as Self Employed online with HMRC