Industry guidance
HMRC Enquiry Help for Taxi, private-hire and delivery drivers
HMRC enquiry guidance for taxi, private-hire and delivery drivers covering platform income, mileage claims and vehicle expenses.
At a glance
- Platform operators can provide HMRC with driver earnings data directly
- Cash fares taken alongside platform bookings need clear, separate records
- You must apply either simplified mileage rates or actual costs consistently for a vehicle, not mix the two
- Private and business mileage need to be clearly apportioned and evidenced
- Renting out a vehicle to another driver creates a separate income stream needing its own records
- Drivers operating through a limited company face different salary, dividend and Corporation Tax considerations
Drivers working through platforms such as Uber, Bolt or delivery apps generate income data that HMRC can access directly from the platform, which makes reconciling declared income to actual platform earnings a routine first step in any enquiry. Drivers who also take cash fares alongside platform bookings face additional scrutiny, since cash income is inherently harder to evidence and HMRC may ask for a detailed breakdown between the two.
Vehicle costs are another significant area, whether claimed through simplified mileage rates or as actual running costs including fuel, insurance, maintenance and finance. Drivers need to apply one method consistently for a given vehicle and be able to show how business versus private mileage was distinguished, since a vehicle used for both driving work and personal journeys requires an apportionment that HMRC will often ask to see evidenced.
Where a driver's declared income doesn't match platform data, HMRC will typically ask for an explanation covering periods of lower activity, cancelled or unpaid fares, and any cash work done outside the platform. Keeping a simple weekly or monthly reconciliation between platform statements and bank deposits, noted alongside any cash income, makes responding to this kind of query considerably more straightforward than reconstructing records after the fact.
Drivers who also rent out or lease their vehicle to another driver when not using it themselves need to consider this as a separate income stream with its own record-keeping, distinct from their own driving earnings. Similarly, drivers operating through a limited company rather than as a sole trader face different considerations around salary, dividends and Corporation Tax that don't apply to self-employed drivers.
Tax areas most relevant to taxi, private-hire and delivery drivers
- Platform income reconciliation
- Cash fare declarations
- Mileage claims versus actual vehicle running costs
- Business versus private mileage apportionment
- VAT registration for higher-earning drivers
- Vehicle rental or lease-out income as a separate income stream
- Limited company structure considerations for drivers
How to prepare
A structured, evidence-led approach from the outset tends to produce a faster and less stressful outcome than responding to each request as it comes in.
- 1
Gather full platform statements for all periods under review, not just summaries
- 2
Keep a mileage log distinguishing business and private journeys throughout the year
- 3
Decide on mileage rates or actual costs and apply the chosen method consistently
- 4
Record any cash fares separately with dates and approximate amounts
- 5
Track total turnover across all driving and delivery work against the VAT threshold
- 6
Keep separate records for any income from renting or leasing out your vehicle
- 7
If operating through a limited company, gather company accounts alongside personal records
What documentation to gather
- Platform statements showing gross fares, commission and net payments
- A mileage log distinguishing business and private journeys
- Vehicle running cost records if claiming actual costs rather than mileage rates
- Records of any cash fares taken outside the platform
- Evidence of vehicle finance or lease agreements, where relevant
- Records of any income from renting or leasing out your vehicle
- Company accounts and payroll records, if operating through a limited company
Common mistakes to avoid
These are the errors we see most frequently in this sector — being aware of them in advance can help you avoid an entirely preventable dispute with HMRC.
Switching between mileage rates and actual costs for the same vehicle across different years
Not keeping a contemporaneous mileage log and estimating business use after the fact
Failing to declare cash fares taken alongside platform bookings
Overlooking combined turnover from multiple platforms when checking the VAT threshold
Claiming the full cost of a vehicle used for both business and significant personal use
Mixing vehicle rental income in with driving earnings instead of recording it separately
Not distinguishing company and personal finances clearly when operating through a limited company
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What happens next
Knowing the typical sequence of events helps you feel more in control and know roughly what to expect at each stage.
HMRC compares platform-reported earnings against declared income
You may be asked to explain any gaps, including cash fares or quiet periods
Mileage or vehicle cost claims are checked for consistency and evidence
HMRC proposes any adjustment based on the reconciliation
The check concludes with an agreed position or, if unresolved, a formal decision
Vehicle rental income is reviewed as its own income stream, separate from driving earnings
Company structure arrangements are checked for correct treatment of salary, dividends and expenses
Frequently asked questions
The questions we're asked most often by businesses in this sector, answered in plain English.
Should I claim mileage or actual vehicle costs?
Simplified mileage rates are often easier to administer, while actual costs can be more accurate for higher-cost vehicles, but you need to stick with one method consistently for that vehicle rather than switching between years.
Does HMRC see my platform earnings automatically?
Platforms are increasingly required to share driver income data with HMRC, so declared income is checked against what the platform actually paid out.
Do I need to register for VAT as a driver?
It depends on your total taxable turnover across all your self-employed activity — once that crosses the VAT registration threshold, registration is generally required regardless of how the income was earned.
What if I drive for multiple platforms at once?
All platform income needs to be combined when calculating your total turnover and profit, and for checking whether the VAT registration threshold has been crossed.
Can I claim for car cleaning and phone costs?
Costs genuinely incurred for the business, such as cleaning required to meet platform standards or the business-use proportion of a phone bill, are generally allowable.
How long should I keep mileage records for?
It's generally sensible to keep mileage logs and related records for at least the statutory retention period applicable to your tax return, in case HMRC opens a compliance check into that year.
Do I need to declare income from renting my car to another driver?
Yes, this is generally a separate source of taxable income and needs its own records distinct from your own driving earnings.
Should I operate as a sole trader or through a limited company?
This depends on your income level, plans, and personal circumstances, and is worth discussing with a specialist since the tax treatment differs meaningfully between the two structures.
Can I claim expenses for a vehicle I rent out as well as drive myself?
Costs need to be apportioned fairly between your own driving use and any rental use, similar to how personal and business use is split for a single vehicle.
Does HMRC treat company drivers differently to sole traders?
The underlying platform income data is the same, but the tax treatment of how profit is extracted — salary, dividends, or drawings — differs significantly between a company and a sole trader.
Do I need to keep fuel receipts if I claim mileage rates?
Not for calculating the mileage claim itself, but keeping some evidence of business mileage driven, such as trip logs from the platform app, supports the overall claim if it's ever queried.
Can I claim for a dashcam or safety equipment?
Costs for equipment genuinely required for the business, such as a dashcam used for driving work, are generally allowable, though items with significant personal use may need apportioning.
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