Thinking of joining the 40,000-strong community of Uber drivers working in the UK? Here’s a look at how much you can expect to make a year and what you might have to pay in taxes.
To become an Uber driver, you’ll need to meet these requirements:
It depends on how much you work. You can take as little as one trip a month and still be on Uber’s books. There’s no limit to how many hours you can work in any given month.
But what’s the hourly rate?
Recently, Uber’s UK head of public policy Andrew Byrne revealed three “typical” hourly rates:
These are the rates you can expect to earn after deducting expenses, including Uber’s cut. Uber’s cut is 25 percent of your earnings.
Uber drivers are self-employed. You’re responsible for paying your own taxes and National Insurance contributions. You must also complete a self-assessment tax return each year.
On the bright side, you don’t pay taxes on all your income, but only on your profits. In other words, you can deduct your business expenses from your total earnings.
Most Uber drivers in the UK are sole traders. Sole traders pay tax at the same rates as regularly-employed people.
Here are HMRC’s tax rates for the 2018/19 tax year.
Sole trader National Insurance rates are a bit different to those employees pay. You’ll have to pay:
As an Uber driver, driving is your core service. So your car is probably your biggest expense. You can deduct at least part of your car-related expenses. You have to prove you made them “wholly and exclusively” for business purposes.
It’s unlikely you’ll be able to get away with deducting all your car costs in full. HMRC will probably question whether you use the car for personal travel, at least some of the time. This means it’s important to keep detailed records.
You can deduct car-related business costs using one of two methods: The mileage method or the actual costs method.
If you owned your car before you became an Uber driver, the mileage method is probably the simplest. Just track your journeys using an app like MileIQ and multiply your business miles by the Approved Mileage Allowance Payment (AMAP) rates. Don’t forget to keep a mileage log.
The actual costs method is a bit more involved. You’ll need to tot up all your car-related costs and deduct personal use. But if you purchased or leased a car to use as an Uber driver, this method can probably result in a bigger deduction.
Aside from your mileage deduction or actual car costs, you can also deduct the following expenses:
A London tribunal recently decided that Uber drivers shouldn’t be regarded as self-employed. This means your tax status and how much money you earn per hour could change in the future.
That said, Uber plans to take its case to the supreme court if necessary. And this could take some time.
So, for now, nothing is going to change.