A self-employed taxi driver is someone who runs their own driving business instead of working for a taxi company as an employee.
You choose your own hours, decide which platform to work on (like Uber, Bolt, or private hire), and are responsible for managing your own income, tax, and expenses. This gives you freedom and flexibility but also means you handle all the paperwork.
In the UK, and especially places like Loughborough, many drivers go self-employed either part-time or full-time. You can work with taxi firms or driving apps, or even build your own list of regular customers.
Key Features:
- You’re not on a company’s payroll.
- Keep full earnings (after fees/tax).
- Must register with HMRC as self-employed.
- You’re in charge of your own business decisions.
Whether you drive a private hire vehicle or use ride-sharing platforms, this setup offers independence—but it also brings responsibilities.
How to Register as a Self Employed Taxi Driver in the UK
If you’re planning to work as a self-employed taxi driver in the UK, registering properly is the first and most important step. It ensures you’re legally allowed to work and lets you pay your taxes correctly.
To get started, you must register with HM Return and Customs (HMRC) as a self -ooter worker. This can be done online through the Government website. After registering, you will receive the only number of taxpayers (UTR) reference in the message. This problem is essential to create your self -assessment income tax declaration every year.
In addition to registering with HMRC, you’ll also need a valid taxi licence. The type of licence you need depends on whether you want to be a hackney carriage driver (who can pick up passengers on the street) or a private hire driver (who must take pre-booked fares). For example, if you’re based in Loughborough, you’ll need to apply through Charnwood Borough Council. The application typically includes a DBS background check, a medical exam, a driving assessment, and sometimes a knowledge test.
Your vehicle must also meet specific licensing and insurance standards. It should be safe, roadworthy, and insured for hire and reward. You may also need to display a badge or licence plate on the car, depending on your local authority’s rules.
Once you’re officially registered and licensed, you must file a tax return every year, even if you earn a small amount. The deadline is usually 31 January for the previous tax year. If your earnings are high enough, you may also need to register for VAT, though that only applies if you earn over £90,000 a year.
Starting this process early is smart. Some councils can take several weeks—or even months—to process a taxi license, so planning ahead will save you time and stress.
What Taxes Do Self Employed Taxi Drivers Need to Pay?
As a self-employed taxi driver in the UK, you’re responsible for paying your own taxes. Unlike employed drivers, tax isn’t deducted from your income automatically—so it’s up to you to calculate and submit it correctly.
The main tax that you will pay is the income tax for your profit. You only pay taxes left after deducting your authorized commercial expenses. In the 2024/25 tax year, you will not pay any income tax for the first 12,570 tables you earn, thanks to personal benefits. Anything over 20%, 40%or 45%, depending on the amount you earn.
In addition to income tax, you also need to pay National Insurance. Most self-employed drivers pay:
- Class 2 National Insurance, if your profits are over £6,725 per year.
- Class 4 National Insurance, if your profits exceed £12,570.
These contributions go toward your state pension and access to certain benefits, so they’re important even if you’re only driving part-time.
You will point out all this thanks to the annual self -assessment income tax return. It must be submitted online before January 31 after finishing the tax year. For example, for income earned in the tax year 2024/25 (ending on April 5, 2025), your statement is due to January 31, 2026.
If you earn more than £1,000 from taxi driving in a year, you must register with HMRC and submit a tax return—even if it’s a side hustle. Failing to do so could result in penalties.
To be notified of your tax, you should ignore some of your income throughout the year. Many drivers use a simple method, saving about 25% of revenue per week in a separate account for tax duration.
What Expenses Can Taxi Drivers Claim?
As an independent taxi driver, one of the biggest advantages is to be able to deduct authorized trade costs for your income. This means that you only pay taxes for your true benefit – not your total profit.
You can request all the “completely and exclusive” costs for your taxi work. For example, if you use your car for personal and commercial reasons, only the commercial is deducted. HMRC allows two methods to require costs: real costs or simplified miles.
Let’s look at the common expenses you can claim.
You can claim for:
- Fuel and vehicle running costs (including servicing, MOTs, oil, tyres, repairs)
- Insurance for hire and reward – this is a must for all taxi drivers
- Taxi licence and registration fees
- Vehicle lease payments or interest on car loans (if the car is used solely for business)
- Depreciation or capital allowances if you own the vehicle
- Cleaning your vehicle regularly for passengers
- Mobile phone bills, if used for bookings or navigation (business portion only)
- Apps or software fees, such as Uber, Bolt, or accounting tools
- Accountant or bookkeeping services
- Advertising, such as online listings or printed flyers
- Parking fees and tolls, when incurred during work trips
If you use the simplified mileage method, you can claim 45p per mile for the first 10,000 miles and 25p thereafter. This method includes all running costs, so you can’t claim fuel or repairs separately.
Let’s say you drove 12,000 business miles last year. You’d claim:
- 10,000 miles × 45p = £4,500
- 2,000 miles × 25p = £500
- Total claim: £5,000
That figure would be deducted from your income before tax is calculated.
Tip: Keep every receipt, record your mileage, and note dates and purposes of trips. HMRC may ask for proof.
What Are the Benefits of Being a Self Employed Taxi Driver?
Becoming a self-employed taxi driver in the UK offers freedom, flexibility, and control over your work life. It’s a popular choice for people who want to be their own boss and earn a living on their own terms.
One of the biggest advantages is flexibility. You decide when to work, how long, and where. This is ideal if you have family responsibilities, want to avoid rush hours, or prefer working evenings or weekends.
Another advantage is the potential to earn more. Because you do not have a fixed salary, your income depends on the number of hours you work and the function of your position. In areas such as Lughborough, drivers often see regular needs by students of students and local businesses.
As a self-employed driver, you also get the opportunity to claim business expenses, which lowers your taxable income. This means you keep more of what you earn.
There’s also a sense of independence. You can choose to work with ride-hailing apps like Uber or Bolt, register with a local taxi firm, or operate independently with your own regular customers. This flexibility is rare in traditional jobs.
Finally, self-employment can be a stepping stone to growing your own business. Some drivers expand into fleet ownership, hire additional drivers, or launch a private hire service.
In short, self-employment gives you control, choice, and the chance to build something that suits your lifestyle.
Is It Worth Becoming a Taxi Driver in Loughborough?
Yes — becoming a taxi driver in Loughborough can be a worthwhile and sustainable career, especially if you value independence and flexible working hours. But like any self-employed job, it depends on your goals and how you manage the business side.
Loughborough offers a strong base for taxi drivers. The town has a large student population, an active high street, and nearby attractions like the university, railway station, and East Midlands Airport. These factors create consistent demand for local transport, especially during evenings, weekends, and holidays.
The relatively compact size of the town also works in your favour. You can cover more trips in less time compared to larger cities, meaning better fuel efficiency and less stress navigating busy roads.
However, success depends on more than just local demand. You’ll need to manage your finances, set aside tax money, and track your expenses. The cost of fuel, insurance, and licence fees must be factored in before you calculate your take-home pay.
If you’re committed to putting in the hours, maintaining your vehicle, and delivering good service, Loughborough can offer you a steady income with room for growth. Many drivers also combine app-based work (like Uber or Bolt) with direct bookings from regular passengers or businesses.
Local Insight: Some drivers partner with restaurants or event venues in Loughborough to offer transport for customers, increasing earnings outside typical peak hours.
Are There Any Downsides to Being Self Employed?
While being a self-employed taxi driver offers freedom and flexibility, it also comes with real challenges that shouldn’t be ignored.
One major drawback is the lack of sick pay and holiday pay. If you don’t work, you don’t earn. This means time off—whether for illness, holidays, or family emergencies—comes at a financial cost. For many drivers, especially those relying solely on taxi income, this can create pressure to keep working even when rest is needed.
There’s also the complexity of managing your own taxes. Unlike salaried jobs where PAYE handles everything, you’re now in charge of calculating and paying your income tax, National Insurance, and possibly VAT. Many new drivers find the paperwork confusing or stressful, especially when dealing with receipts, mileage logs, and HMRC deadlines.
Then there are upfront costs. Becoming a licensed taxi driver isn’t free. You may need to pay for a private hire licence, vehicle inspections, enhanced DBS checks, and insurance for hire and reward. These can add up quickly, especially if you’re just starting out. Buying or leasing a reliable vehicle can also be expensive.
In real life, self-employed drivers often talk about periods of slow demand, especially in quieter towns or during off-peak hours. Rising fuel costs, vehicle maintenance, and competition from other drivers or ride-hailing apps can eat into profits. Without proper financial planning, these challenges can cause stress or even lead to debt.
In short: you gain control, but you lose the safety net. Self-employment rewards independence—but it demands resilience and good money management.
How to Keep Records and Stay Organised
Staying organised is essential for any self-employed taxi driver. Good record-keeping not only keeps you compliant with HMRC but also helps you track your earnings, understand your expenses, and prepare for tax time with less stress.
You don’t need to be an accountant to stay on top of your finances. Many taxi drivers use simple bookkeeping methods such as keeping a physical notebook, creating a spreadsheet, or using digital apps to log daily income and expenses. The important part is doing it regularly—ideally at the end of each day or week.
Digital tools can make this easier. Affordable apps like QuickBooks, FreeAgent, Sage, or even free options like Wave let you record transactions, scan receipts, and track mileage with your phone. These tools often link to your bank account and automatically sort your spending, saving you time.
One common mistake many drivers make is not keeping their receipts. But receipts are your proof of business expenses—and without them, you could miss out on valuable tax deductions. This includes fuel, maintenance, insurance, licence fees, tolls, and even your car washes.
It’s also smart to keep digital copies. Snap a photo of each receipt using your phone and store it in a folder or upload it directly into your accounting app. Over time, this becomes a habit and can save hours when preparing your Self Assessment.
A good rule: if it relates to your taxi work, log it. Keeping clean records can protect you during HMRC audits and help you avoid penalties.
Do I Need an Accountant as a Taxi Driver?
You don’t need an accountant by law—but many self-employed taxi drivers in the UK choose to hire one for peace of mind and better financial control.
If your finances are simple and you are confident to use HMRC online tools, you can manage everything yourself. This includes registration to self -assess, monitor your expenses and submit your income tax declaration. Many drivers do this in this way, especially the first year to save money.
However, hiring an accountant becomes a smart choice when things get more complex. For example, if:
- You drive part-time and have another job
- You earn close to or over the VAT threshold (£90,000+)
- You claim lots of business expenses
- You lease or finance your vehicle
- You want to grow into a limited company or run a fleet
A good accountant will help you save time, avoid mistakes, and reduce your tax bill legally by identifying expenses you may not have known you could claim. They’ll also help you file on time and stay compliant with HMRC.
There are two popular options: local accountants and online accountants. Local firms can be useful if you prefer in-person meetings or want someone who understands Loughborough’s local licensing environment. Online accountants, on the other hand, often offer lower monthly rates and flexible support via phone, email, or app.
How Much Does an Accountant Cost for Taxi Drivers?
The cost varies depending on your setup, income, and the level of service you want.
On average:
- Basic tax return support: £150 – £300 per year
- Full accounting with bookkeeping & advice: £30 – £80 per month
- Online accountants (like GoSimpleTax or TaxScouts): from £120 per year
For many drivers, the tax savings more than cover the cost of hiring an accountant—especially if you’re unsure about rules or want help staying on top of paperwork.
Tip: If you’re just starting out, you might manage on your own. But once things grow, a good accountant can become one of your best investments.
Example: Loughborough-Based Taxi Driver’s Tax Journey
To understand how tax works in real life, let’s look at a hypothetical example of a self-employed taxi driver in Loughborough named Mark.
Mark’s Story
Mark began working full-time as a private hire taxi driver in Loughborough in April 2024. He joined a local firm that connects him with passengers and also takes jobs through apps like Bolt. He works about 40–50 hours a week.
By March 2025, he earned a total of £36,000 from fares.
Here’s how Mark’s year looked financially:
- Total income: £36,000
- Allowable expenses: £11,000
(including fuel, maintenance, insurance, phone bill, licence fees, and accounting software) - Taxable profit: £25,000
Mark is entitled to the personal allowance of £12,570. That leaves him with £12,430 taxable at 20%.
- Income Tax owed: £2,486
- Class 2 NI: flat £179.40 (for the year)
- Class 4 NI: 9% on £12,430 = £1,118.70
Total Tax Bill:
£3,784.10
Mark set aside about 25% of his weekly income to cover tax, so he had no trouble paying it when his Self Assessment was due in January 2026.
What Mark Learned:
- Track everything weekly: Mark used a free app to log mileage, fuel, and fares. This saved hours at year-end.
- Separate bank account: He opened a second account just for business, which made tax prep easier.
- Accountant vs DIY: In his first year, Mark filed his return himself. But next year, he plans to use an online accountant to save time and make sure he’s claiming everything correctly.
- Avoiding stress: By setting aside money every week, Mark avoided panic when his tax bill arrived.
Mark’s journey shows how simple habits—like regular logging and saving—can make life easier for self-employed taxi drivers in Loughborough.
FAQ – Self Employed Taxi Driver Questions Answered
Can I drive for Uber and be self-employed?
Yes, you can. In fact, most Uber drivers in the United Kingdom are classified as independent private leasing drivers. You are responsible for registering as an employee who owns himself with HMRC, creating a statement of your self -assessment income and paying your income tax and national insurance. Uber provides a summary of your income, but depending on you to follow your expenses and tax administration.
✅ Tip: Keep records of all trips, fees, and commissions to claim allowable expenses at tax time.
What insurance do I need as a self-employed taxi driver?
You need insurance and reward insurance, specially designed for rental drivers and private taxis. Standard car insurance does not include passengers. You may also need civil liability insurance if you work independently or with a local business. This protects you if a passenger requires injury or loss.
✅ Without hire and reward insurance, you’re not legally covered to drive paying passengers.
Can I use my car for personal and business use?
Yes, but you can only request business expenses for your tax. If you use the same car for both, you will have to follow the miles and divide the costs accordingly. For example, if 70% of your driver is to work, you can request 70% of fuel, service and insurance costs.
✅ Alternatively, you can use the simplified mileage method to make claiming easier.
What is a private hire licence?
A private hire licence is required if you want to drive pre-booked passengers in a vehicle that’s not hailed on the street (unlike black cabs). You’ll need one from your local council—such as Charnwood Borough Council for Loughborough. To qualify, you’ll usually need:
- A clean driving record
- A criminal background (DBS) check
- A medical exam
- A vehicle inspection
The licence is essential if you plan to work with platforms like Uber, Bolt, or a local taxi office.
Do I need to file taxes every year?
Yes, if you are independent, you must create a self -assessment income statement every year. His fiscal year takes place from April 6 to April 5. Your income tax return is usually due to January 31 of the following year. For example, the income statement 2024-2025 is due to January 31, 2026.
If you do not send or pay in time, HMRC can issue punishments and benefits.
Always set aside 20–30% of your income weekly to cover your tax bill comfortably.
Is Becoming a Self Employed Taxi Driver Right for You?
Independent work is not for everyone, but because of the right people, becoming an independent taxi driver may be a rich and flexible career. Before you start, ask yourself the following questions.
✅ Do You Value Independence?
You will be your own boss. This means determining your own time, choosing your working day and deciding how many jobs. This uses people who like freedom to structure. But with this freedom, he is responsible, especially when the company is slow or unexpected costs occur.
✅ Are You Comfortable Managing Finances?
As a self-employed taxi driver, you’ll need to:
- Track income and expenses
- Save for tax
- File a Self Assessment return
If you’re confident handling your money—or willing to hire an accountant—you’re on the right track. If not, it may feel overwhelming.
✅ Can You Stay Self-Motivated?
There’s no manager checking in, and no guaranteed paycheck. You’ll need to motivate yourself daily, plan your schedule, and stay focused—even on quiet days. Discipline is key to long-term success.
✅ Do You Enjoy Working with People?
Taxi driving is a people-facing role. If you enjoy meeting new passengers, making conversation (when welcome), and offering helpful service, you’re likely to build repeat business. If social interaction isn’t your strength, the job may become tiring.
✅ Are You Prepared for Vehicle Maintenance and Costs?
You’ll need to maintain your vehicle regularly, pay for fuel, repairs, insurance, and licensing fees. If you’re not ready to budget for these upfront and ongoing costs, self-employment may feel more stressful than rewarding.
✅ Do You Want a Side Hustle or Full-Time Career?
Taxi driving can work well as a side income if you have spare evenings or weekends. It can also grow into a full-time business. If flexibility is a priority in your life, this path could suit you well.
Final Thoughts: Is Self Employment as a Taxi Driver Right for You?
Becoming an independent taxi driver in Loughborough provides flexibility, independence and the possibility of your own boss. This is suitable for those who like to drive, meet new people and manage their own schedule.
However, it also demands careful financial planning, discipline, and the willingness to handle your own taxes and expenses. There’s no safety net like sick pay or holiday pay, so being prepared is key.
If you feel ready to take control of your working life and want to earn on your terms, this could be the perfect opportunity.
Ready to Get Started?
If you want expert advice on managing your finances as a self-employed taxi driver or need help with your tax return, we’re here to help. Contact us today for a free consultation and find out how an accountant can make your journey easier.
Call us now or book your appointment online to get started with confidence.
