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.
When do I need to register as self-employed?
Typically you should Register with HMRC once you start work. However, the deadline you need to register by is the 5 October after the end of the tax year in which you became self-employed.
Here is an example to make things clearer on when you should register as self employed:
if you started self employed work in May 2021, you’d need to register with HMRC by 5 October 2022.
If that is still a little confusing why not contact Ugo Tax who can register you for self employment.
How do I register as self-employed?
Registering as self-employed is a relatively simple process, but here’s an overview of some of the information you’ll need to provide:
- the date you started your business
- basic personal details, including your National Insurance number and home address
- information about the job you do
Create a ‘Government Gateway’ account.
Using the link below you need to create a government gateway account by entering your full name, email and password. A user ID will then arrive in your registered email account which needs to be kept safe.
Log in to your Government Gateway account and select ‘Add a tax’
Sign back in to your Governent Gateway account using your user ID and password, and you will see an option to add a tax to your account. Follow each of the steps and that’s it.
Wait for your UTR number to arrive.
Once you have registered you will receive a letter in the post usually after 7-10 days from HMRC which will have your 10-digit Unique Taxpayer Reference. This letter needs to be kept safe as it is required to file your tax return.
Get in contact with an accountant.
The final step is to get in contact with an account and discuss your options. I would recommend Ugo Tax who specialise in tax returns for fast food delivery drivers.