High gross fares, the vehicle expense decision, plate and licence fees, radio-circuit costs and a mix of cash and card. Here's how Making Tax Digital for Income Tax applies to taxi drivers, and when it starts.
MTD for Income Tax is measured on gross income before costs. With fuel and vehicle costs high, taxi drivers reach £50,000 of fares sooner than the take-home suggests.
Because so much of your income goes on fuel, insurance and the vehicle, your gross fares are much higher than your profit. MTD tests the gross figure, so it's worth checking where you stand.
Your annual Self Assessment return is replaced by four short quarterly updates and a year-end final declaration, all through recognised software.
Pick a vehicle expense method and stick to it, then keep the records that support it.
Flat-rate mileage or actual costs plus capital allowances. It's usually one or the other, so choose and keep the records.
Hire-and-reward insurance, plate and licence fees are deductible. Keep them recorded so nothing is missed.
All fares are income. Log cash on the app and import card and app takings so your gross is complete.
Radio-circuit and booking-platform fees are deductible. Record them against your fares each quarter.
You're on the road, not at a desk. Clear Books lets you keep records from your phone and gives HMRC exactly what MTD requires.
Log fares and vehicle costs as you go, and send your first quarterly update in minutes.
