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Accountants for Uber Drivers – Are They Needed?

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Accountants for Uber Drivers – Are They Needed?

Are you an Uber driver? If so, you need to ensure that you submit an accurate self-assessment tax return each year and, with new rules and data sharing now in place, it’s never been more important to get your figures right. You may therefore be wondering whether you need an accountant. Today’s guide gives Uber drivers an overview of the main rules for complying with HMRC, what they need to supply, and how accountants like Taxfile can help drivers with accounting, bookkeeping and self-assessment tax returns each year. By getting these right, Uber drivers will minimise tax, keep on the good side of HMRC and fulfil their tax obligations. Doing so will also help them avoid a financial mess and, potentially, nasty penalties from HMRC.

Do Uber Drivers Need an Accountant?

As well as doing the job of driving, Uber drivers need to report their earnings and pay any taxes and National Insurance due to HMRC. This needs to be done accurately and on time in order to avoid HMRC penalties. This is more important than ever now because, since 1 January 2024, digital platforms like Uber will be legally required to report drivers’ income directly to HMRC. Professional drivers will therefore need to be 100% accurate in what they report and pay in terms of tax. Therefore, getting expert help from an Uber accountant is recommended — and the accountancy fees are tax-deductible.

“The regulations will support the government’s work to help taxpayers get their tax right first time, and to bear down on tax evasion.” (HMRC)

As part of the process, Uber drivers will need to submit an accurate self-assessment tax return each year. At the time of writing (July 2024), the next one they will need to file with HMRC is for the tax year 2023-24. The deadline is in January 2025 (or 3 months earlier if filing via the old-style paper tax return).

“Drivers remain self-employed for tax purposes and still have to complete an annual tax return.” (Uber.com)*

Tempted to Do Your Own Tax Return?

When Uber drivers log into their Uber account, they will have access to a tax report which shows their earnings and expenses. It may be tempting to use only this information to do their own Self-Assessment tax return. However, the information supplied via the Uber account will not include capital allowances on vehicles purchased and potentially many other claimable expenses like those that we highlight later in this guide. In other words, they could lose out — and pay more tax than they need to! That’s a major reason why employing an accountant like Taxfile makes sense for Uber drivers.

Taxfile: an Uber Driver Accountant in South London

Taxfile’s accountants and tax agents work with many professional drivers every year, including Uber drivers. We are therefore experts at working out income, expenses, National Insurance, income tax, and compliance with HMRC requirements and deadlines. This culminates in us submitting hundreds of self-assessment tax returns for drivers every year. For professional drivers working through digital platforms like Uber, we work out drivers’ income and help to reduce any tax liability by offsetting all eligible expenses. We also help drivers register for Self Assessment when they first start. This gives them a UTR number, which is needed in order to file a tax return.

What Expenses Can Uber Drivers Offset Against Tax?

There are several expenses that Uber drivers can potentially offset against income in order to reduce tax. As you might expect, many stem from the use of a vehicle for the business. Examples include:

  • The part of the driver fees paid to Uber;
  • Road tax;
  • The cost of MOT tests;
  • The cost of maintaining the vehicle e.g. servicing, cleaning and repairs;
  • Fuel costs/mileage (there are several different ways to approach this);
  • The cost of leasing or renting the vehicle;
  • Capital allowances on vehicles purchased;
  • Parking and any toll fees;
  • The cost of vehicle insurance;
  • Accountancy fees associated with running the business;
  • Bank loan interest;
  • Use of a phone, radio, and/or GPS system for the business;
  • Costs associated with marketing the business (advertising etc.);
  • And possibly additional costs not listed here.

Taxfile can advise on all of these to ensure that Uber drivers pay no more tax than they absolutely need to. Such expenses can usually be offset where they apply to business-related use (not personal). Uber drivers must keep comprehensive and accurate records, i.e. invoices and receipts etc., in order to claim.

So, if you are an Uber driver or are planning on becoming one, please get in touch with Taxfile. We’ll help to get you set up for Self-Assessment and subsequently work with you to ensure your figures are correct, your tax return is accurate, and that it is submitted to HMRC in good time before the deadline. By doing so, you’ll know your tax affairs are in order and be able to avoid any nasty HMRC penalties. With our help, you’ll pay no more tax than you need to. You’ll also get a more accurate picture of your finances and help avoid surprises that might otherwise adversely affect cash flow.

*Are Uber Drivers Employees, Workers, or Self-Employed?

In terms of employment status, Uber drivers in the UK are now legally classed as workers rather than self-employed contractors or employees. This follows a ruling by the UK Supreme Court in 2021 (∞), which gives them certain employment rights.

However, purely from a tax standpoint, Uber drivers are effectively self-employed, hence the requirement to submit a Self-Assessment tax return each year.

VAT Schemes in the UK: A Guide for Businesses

VAT Schemes in the UK: A Guide for Businesses

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VAT Schemes in the UK: A Guide for Businesses

For businesses operating in the UK, understanding Value Added Tax (VAT) schemes is crucial. Not only does VAT impact your cash flow, but navigating the different options can feel overwhelming. This blog post simplifies VAT schemes in the UK, helping you choose the most suitable one for your business. Read more

A Brit's Guide to Value Added Tax (VAT) Returns

A Brit’s Guide to Value Added Tax Returns

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A Brit's Guide to Value Added Tax (VAT) Returns

VAT — the three little letters that strike fear into the hearts of many a Brit. But fear not, fellow taxpayer! Today, we’re taking a break from the spreadsheets and diving into the delightfully quirky world of UK VAT returns.

VAT, the Shapeshifter

Ever feel like VAT is playing a game of tax-code whack-a-mole? One minute, it’s 20% on your fancy new bicycle helmet. The next, it’s vanished like a magician’s rabbit on a packet of crisps (because, let’s face it, crisps are a VAT mystery all on their own).

The Great Cake Debate

Who knew a simple sponge cake could cause such a stir? Apparently, a sprinkle of chocolate transforms it into a full-VAT situation. Don’t worry, Victoria sponges are safe (for now).

VATman vs. the Smoothie Smugglers

Remember the smoothie wars of ’07? Innocent Drinks tried to claim their creations were “liquefied fruit salad” to avoid VAT. HMRC, ever the defender of fiscal justice, said, “Not so fast, those are clearly beverages!”  A tale that proves even the fruitiest tax battles can be entertaining.

Filing Follies

We’ve all been there. You’ve spent hours on your return, feeling smug and self-assured. Then, with a click of the submit button, dread washes over you. Did you forget something? Did you use the wrong form for your pet rock collection (because, yes, VAT rules apply there too)? Deep breaths, everyone. VAT return blunders are a thing.

The Refund Rumble

There’s nothing quite like the thrill of a VAT refund. It’s like finding a forgotten banknote in your winter coat – a financial windfall delivered straight from HMRC! Just remember, with great refunds comes great responsibility (to spend it wisely, of course).

 

VAT returns might not be a walk in the park, but with a little humour and a helpful accountant, they can be a gentle breeze on a summer’s morning.

At Taxfile we take the ‘tax’-ing aspect out of VAT returns leaving you with the ‘value added’, focusing on what is important for you and your business.

We can run your VAT from start to finish; all you need to do is keep a digital footprint of your financial data.

Do I Need to Register for Self-Assessment?

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Do I Need to Register for Self-Assessment?

by Mohamed at Taxfile.

In today’s guide, we look at the rules around whether or not you need to register for Self-Assessment and submit a tax return to HMRC each year. Let’s take a look.

Reasons to Register for Self-Assessment

You generally need to register for a Self-Assessment tax return if your income isn’t taxed at the source, meaning the tax isn’t automatically deducted from your wages/salary. Here are some common scenarios where you would need to register for self-assessment:

  • You are self-employed — sole traders, freelancers, and consultants typically fall under this category.
  • You receive rental income — if you earn income from renting out a property, you need to register.
  • You have a high income — employees earning over £100,000 per year need to register as their tax calculations may become more complex. (From 2023-24 you are only required to register if your income is above £150,000).
  • You have other income sources — this includes income from abroad, dividends, and partnership profits.

If you are still unsure about registration, please contact HMRC or call Taxfile on 0208 761 8000.

Registering for UK Taxes is Important

Registering for UK taxes is important for a few reasons, as we’ll explain below.

Firstly, it helps you avoid penalties. If you don’t register for Self-Assessment when required, you could face penalties from HMRC. These can be significant, especially if you’ve been earning income for a while without registering.

Secondly, it helps to ensure accurate tax payments. By registering and filing a Self-Assessment tax return, you ensure you’re paying the correct amount of tax. Without it, you might underpay and owe interest, or overpay and have to wait for a refund.

Thirdly, it helps you stay legally compliant. In severe cases, failing to register and pay your taxes can lead to legal action, including prosecution.

Registering also helps you maintain good standing with the Government. Being registered with HMRC shows you’re taking your tax obligations seriously. This can also be important if you’re applying for credit, a mortgage, or a visa.

Do Directors Need to Do a Self-Assessment?

Not all directors need to do a Self-Assessment tax return, but some do. Here’s a breakdown:

Directors with only PAYE income

If your only income from the company is through PAYE (Pay as You Earn), where tax is deducted at source, you generally don’t need to do a Self-Assessment.

Directors with additional income

If you have any other taxable income besides your salary, like dividends, company benefits, or income from another job, you likely do need to do a Self-Assessment tax return in order to report it.

However, even if you aren’t required to register, HMRC might still ask you to file a Self-Assessment return.

Learn more about director self-assessment here.

Why is Payroll Important for a Director?

Payroll ensures compliance with tax regulations. Directors are considered employees for tax purposes, and PAYE is the system used to collect Income Tax and National Insurance Contributions (NICs) from their salary. Running payroll ensures these deductions are made and reported correctly to HMRC.

Payroll creates a clear and accurate record of your director’s salary payments. This is important for tax purposes, but also for things like calculating benefits and pension contributions that might be tied to salary.

Being on payroll allows directors to qualify for certain benefits they wouldn’t get if paid through dividends alone. These can include enrolling in a company pension scheme and accruing National Insurance credits that contribute to your state pension.

Payroll ensures transparency by helping to maintain a clear separation between personal finances and the company’s finances. This is important for legal and accounting reasons.

While there might be tax advantages to structuring some of your director’s income as dividends, payroll remains a vital part of ensuring you’re following regulations and have a clear record of your director’s overall compensation.

Learn more about how to pay yourself as a director here.

Demystifying the SA302: Your Tax Summary Explained

Demystifying the SA302: Your Tax Summary Explained

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Demystifying the SA302: Your Tax Summary Explained

by Faiz at Taxfile

An SA302 is a document issued by HM Revenue & Customs (HMRC) that summarizes your income tax calculation for a specific tax year. It shows how your tax bill was arrived at, including your income from various sources, any deductions and allowances, and the final amount of tax owed or refunded.

An SA302 can be essential documentation in various situations. For instance, you might need it when applying for a mortgage, a visa, or a business loan, as it serves as proof of your income and tax obligations.

How & Where to Get an SA302

If you need a copy of an SA302 there are various ways of obtaining them:

• If you have done your tax return yourself via HMRC’s portal, you can log into your Government Gateway and download copies of them;
• If you have used an accountant that uses external software, then your accountant can provide you with the calculations. It’s worth noting that HMRC has a list of lenders that will accept the tax calculations from the accountant’s software. If your lender’s name is not on this link, then you or your accountant would need to contact HMRC and ask them to send you one. This can take up to 14 days to arrive via post.

Avoiding Errors & Information Mismatches

At Taxfile we receive a lot of SA302s for our clients that have been sent to us by HMRC. This happens when there has been some error or omission on a client’s tax return that was submitted and didn’t match what HMRC had logged on their system. To explain:

HMRC holds the following information about each taxpayer:

• Student loans;
• Private pension contributions;
• PAYE income;
• Jobseeker allowance;
• Child Benefit along with salary information (so, if one of the parents was on a salary of £60,000* or more, then HMRC will recover some or all of the benefit);
* (£50,000+ for the tax years 2023/24 and prior)
• Registration for Class 2 National Insurance.

Because HMRC holds such information, our clients must check their tax returns carefully to ensure all the points mentioned above have been correctly covered and included in the tax return where appropriate. This is a crucial step when we provide the calculation and clients should also carefully read the declaration notes that are provided.

Guide to the Employer Payment Summary (EPS) – for Limited Companies within the CIS

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Guide to the Employer Payment Summary (EPS) – for Limited Companies within the CIS

by Daniel at Taxfile.

Understanding the Employer Payment Summary (EPS) monthly claims for limited companies within the CIS

Limited company contractors operating within the Construction Industry Scheme (CIS) have distinct payroll obligations, including the submission of their Employer Payment Summary (EPS). In today’s guide, we’ll explain what the EPS is, its purpose, and the submission rules limited companies have to follow if they work within the Construction Industry Scheme.

What is the EPS?

The Employer Payment Summary serves as a crucial mechanism for limited company contractors to report additional payments, deductions, and adjustments to HM Revenue & Customs (HMRC) alongside their regular payroll submissions. While all such employers submit a monthly EPS, limited company contractors operating under CIS have specific considerations due to their status and the nature of their work within the construction industry.

The purpose of submitting monthly EPSs for Limited Company Contractors in the CIS

The primary purpose of EPSs for limited company contractors operating within the CIS is to provide HMRC with accurate information about deductions suffered under the Construction Industry Scheme. By submitting each monthly EPS for CIS, limited company contractors also ensure compliance with CIS regulations and provide HMRC with essential data for tax calculations and entitlements.

Submitting an EPS for Limited Company Contractors working within the CIS

Limited company contractors operating within CIS are required to submit an EPS to HMRC every month, even if there are no adjustments to report. EPSs should be submitted after the end of the tax month but before the 19th of the following month, in line with HMRC guidelines.

Contractors can use HMRC’s online services or compatible payroll software to submit their monthly EPS for CIS. It’s crucial to ensure that the information provided in each EPS accurately reflects the deductions suffered under CIS.

The CIS deductions suffered sent through an EPS are promptly reflected as a credit on the PAYE account. This credit will then be utilised to set off against other liabilities, including PAYE tax, National Insurance Contributions (NIC), and subcontractor’s tax submitted through the CIS300 return.

When sending the EPS you can also claim Employment Allowance and recover statutory payments that exceed the amount of PAYE due.

Submitting EPSs late may lead to penalties imposed by HMRC, which can vary based on the extent and frequency of delays.

CIS Accountancy Help from Taxfile

At Taxfile, we can provide guidance on compliance requirements, tax calculations, and record-keeping practices.

Get in touch today for any accountancy or tax issue that needs expert help.


020 8761 8000 Book Appointment Contact Us

We can help whether you are a contractor, subcontractor, sole trader or limited company business in South London or the South West.

We are accountants in Tulse Hill, Dulwich and Devon/Cornwall.

CIS Contractor's Monthly Return (CIS300) - Explained

CIS Contractor’s Monthly Return (CIS300)

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CIS Contractor's Monthly Return (CIS300) - Explained

by Daniel at Taxfile.

The CIS Contractor’s Monthly Return is a mandatory requirement for contractors operating within the Construction Industry Scheme (CIS). It acts as a mechanism for contractors to disclose to HM Revenue and Customs (HMRC) payments issued to subcontractors and the corresponding tax deductions withheld from those payments. By providing HMRC with information regarding payments rendered and the accompanying tax deductions, the CIS Contractor’s Monthly Return guarantees transparency and adherence to regulations within the construction sector. In today’s guide, we explain the various components of the monthly ‘CIS300’ return, how the process works, key deadlines, the ramifications of non-compliance, and much more.

Key Components of the Monthly Return

The CIS Contractor’s Monthly Return typically includes the following key components:

This section includes information about the contractor, such as their name, Unique Taxpayer Reference (UTR), and contact details. Ensuring accuracy in this section is crucial for HMRC’s records and communication purposes.

Contractors must provide details of all subcontractors they have engaged during the reporting period. This includes the subcontractors’ names, UTRs, and payment amounts.

Contractors must report the total payments made to each subcontractor during the reporting period. This information helps HMRC track payments within the construction industry and verify compliance with tax obligations.

Contractors are required to calculate and report the tax deductions made from payments to subcontractors. The deducted amounts are typically based on the subcontractors’ verification status and tax treatment under the CIS.

The Monthly Return concludes with the calculation of the total amount due to HMRC, taking into account the tax deductions made from payments to subcontractors.

Deadlines and Reporting Periods

The CIS Contractor’s Monthly Return deadlines follow a structured timeline, which includes:

  • The submission deadline — contractors must submit their Monthly Returns to HMRC by the 19th of each month following the end of the reporting period. (Contractors’ payments to HMRC must also be made by this date).
  • The reporting period covered by each Monthly Return — which typically spans from the 6th of the previous month to the 5th of the current one.

Making Your CIS Payments to HMRC

Once you’ve calculated the total CIS deductions, prepare to make the payment to HMRC. You will need to have the following information ready:

  • Your Unique Taxpayer Reference (UTR) number;
  • Your payment reference, which is your 13-character Accounts Office reference number followed by the letter ‘C’ (e.g., 123PA12345678C);
  • The amount you’re paying.

HMRC offers various payment options for settling your CIS liabilities, which are explained here.

  • A contractor who operates as a limited company and also acts as a subcontractor might find that they are exempt from making any payments to HMRC. Subcontractors who do not have gross payment status will incur CIS deductions, which can then be used to offset any CIS payments owed to HMRC. This is exclusively available to limited companies. Please look out for our forthcoming blog focused on the CIS claim — a hyperlink will follow here once it’s live.

Implications of Non-Compliance

Failure to meet CIS Contractor’s Monthly Return deadlines can lead to various consequences, which may include the following:

  • Penalties — HMRC may impose penalties for late or non-submission of Monthly Returns, which can escalate over time.
  • Loss of benefits — non-compliance with CIS obligations, including Monthly Return deadlines, can lead to loss of benefits such as gross payment status, affecting contractors’ cash flow and competitiveness.

Managing the CIS Monthly Return Process

For contractors, efficiently managing the CIS Contractor’s Monthly Return process involves the following steps:

1. Maintain Accurate Records

Contractors should maintain accurate records of payments made to subcontractors and tax deductions applied. This includes keeping track of invoices, receipts, and CIS statements.

2. Timely Submission

The Monthly Return must be submitted to HMRC by the 19th of each month following the end of the reporting period. Contractors should ensure timely submission to avoid penalties and maintain compliance.

3. Use HMRC Online Services

HMRC provides online services for submitting CIS returns, making the process convenient and accessible for contractors. Registering for and using these online services can streamline the submission process and reduce administrative burdens.

The CIS Contractor’s Monthly Return is the key tool through which to report payments and tax deductions accurately to HMRC. Understanding its components and effectively navigating the submission process helps to ensure that contractors are compliant — and also avoids unnecessary penalties.

Rest assured, though: Taxfile is here when you need help with CIS returns and accountancy for construction workers, bookkeeping, CIS tax rebates for subcontractors, limited company accounts, and any tax-related matters that require professional help. We’re happy to provide guidance on compliance requirements, tax calculations, record-keeping practices, and much more.

Understanding Overpayment Relief – Types, Eligibility & How to Claim

Understanding Overpayment Relief

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Understanding Overpayment Relief – Types, Eligibility & How to Claim

by Mohamed at Taxfile.

Have you ever felt that you’ve paid more in taxes than necessary? Whether due to calculation errors, changes in personal circumstances, or evolving tax laws, overpayments can happen to anyone. The good news is that there’s a way to reclaim those excess funds through the process of overpayment relief claims. In this comprehensive guide, we’ll walk you through the ins and outs of reclaiming your hard-earned money.

What is Overpayment Relief?

Overpayment relief allows you to recover money you’ve mistakenly paid to HMRC within four years after the end of the tax year in which the overpayment occurred. It’s a financial safety net that allows you to correct discrepancies and regain control of your finances. Understanding the concept is the first step toward putting your overpaid taxes back where they belong – in your pocket.

Types of Overpayment

The overpayment must be for income tax, capital gains tax (CGT), Class 4 National Insurance contributions (NICs), or corporation tax. It applies to both overpayments and excessive assessments.

Eligibility Criteria

You must have a valid reason for believing you overpaid tax. This could be an error in your tax return, incorrect coding by HMRC, or changes in your circumstances affecting your tax liability. You cannot claim overpayment relief simply by correcting your tax return after the deadline.

Claiming Overpayment Relief

You need to submit a formal claim to HMRC in the correct format, explicitly stating that it’s for “overpayment relief.”

The claim should clearly identify the tax year, the amount you believe you overpaid, and the reason for the overpayment. Include any supporting evidence, like documents confirming income, deductions, or expenses. Your claim must be submitted within specific time frames — generally, four years from the end of the tax year for which you’re claiming. Special rules apply for late claims.

Claim Format

Your claim must be made in writing, stating the tax year, the amount overpaid, the reason for your claim, and whether you’ve previously appealed. You cannot claim through your tax return.

For more information please refer to the HMRC website or get in touch with Taxfile.

Tax & Accountancy Help from Taxfile

At Taxfile we are skilled at identifying opportunities for additional savings, deductions, and credits that individuals might overlook. You can call us on 020 8761 8000 to schedule a free 20-minute, no-obligation consultation for any tax-related matter — or simply use the buttons below:

020 8761 8000 Book Appointment Contact Us

Taxfile is a tax advisor and accountant in Tulse Hill at 25 Thurlow Park Road, Tulse Hill, London SE21 8JP. We’re on the corner at the junction of Birkbeck Hill and the South Circular (A205), within easy walking distance of Tulse Hill station (map). We also have a Dulwich office as well as helping people with tax and accountancy in Devon and Cornwall.

Taxfile is Open on Sunday Mornings in January — Perfect for 2022-23 Tax Returns

We’re Open on Sunday Mornings in January — Perfect for 2022-23 Tax Returns

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Taxfile is Open on Sunday Mornings in January — Perfect for 2022-23 Tax Returns

With the self-assessment tax return deadline almost upon us, we are opening our Tulse Hill office* on Sunday mornings, 9 am to 1 pm, for the remainder of January. That’s as well as the previously announced Saturday morning opening during the same hours. It’s the perfect opportunity to discuss your tax return with us or bring in figures and records without having to disturb your working week. Weekend time slots are limited, though, so please book a free 20-minute appointment as soon as possible if you’d like to visit.

020 8761 8000 Book Appointment Tax Return Help
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Information You Need to Supply for Professional Help with Your Tax Return

Information You Need to Supply for Professional Help with Your Tax Return

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Information You Need to Supply for Professional Help with Your Tax Return

If you’re self-employed in the UK, you need to file a self-assessment tax return each year. It’s not only the self-employed, though. If you are on a higher income* or receive untaxed income from property rental, savings, investments, or dividends, you also have to submit a return. Getting all the fields filled in properly and the figures right can sometimes be difficult, though. That’s where professional help will be worth its weight in gold. But what information will your accountant or tax advisor need from you? That’s what today’s post is all about, and we’ll explain exactly what information you’ll need to supply.

* (Those earning more than £100,000 currently, or over £150,000 from next year). Read more