The demand for couriers has skyrocketed in the last year or so and it’s seen more people than ever consider the career. It’s easy to see why it’s proven so popular too as all you need is a full UK drivers’ license to get started and you’ll get to take advantage of the freedom of the open road and the ability to set your own hours.
But, for many the plunge into the world of the self-employed can be more than a little daunting, especially when it comes to working out taxes. That’s why we’ve put together this guide to tell you all you need to know about self-employed courier tax. Keep reading to find out what you can claim…
Self-employed courier tax returns
As a self-employed courier or delivery driver, you’ll need to fill out a self-employed tax return to declare how much you earn. Find out more about self-employed tax returns in our guide.
Allowable expenses for self-employed couriers
As a self-employed individual, there are certain essential business costs which aren’t taxable by HMRC. Couriers may be able to claim:
- Fuel costs
- Vehicle repair and servicing costs
- Road tax
- MOT costs
- Interest on any loans taken out to pay for the vehicle
- Vehicle insurance
- Courier insurance
- Breakdown cover
- Parking and toll fees
- Vehicle hire costs
It’s important to note that you won’t be able to claim for any personal driving costs, so if you also use your vehicle personally, you’ll need to factor this in when doing your self-assessment. For example, if you use your vehicle for 10% personal or family use, you’ll need to reduce your claim for any running costs by 10%.
Additionally, this may sound obvious, but you can’t claim for any driving or parking fines!
How do I claim allowable expenses?
It’s relatively straightforward to claim allowable expenses and you do it as part of your annual self-employed tax return. You won’t need to submit proof of your expenses at this stage, but it’s a good idea to keep complete and accurate records of any expenses, as you may get asked by HMRC to provide evidence at a later date.
Simplified expenses for self-employed couriers
If you want to avoid the hassle of working out your self-employed courier tax, you can use simplified expenses instead. This is where you use flat rates instead of working out actual costs (which can be quite complex). The current flat rates offered by HMRC for milage are:
- 45p per mile for the first 10,000 miles
- 25p per mile for any miles after 10,000
- 24p per mile for motorcycles
When filling out your tax return you’ll simply need to multiply the above rates by the amount of miles driven.
Once you’ve used simplified expenses for your business vehicle, you’ll have to continue doing so for as long as you use that vehicle for work. Additionally, you can’t claim simplified expenses for a vehicle you’ve already claimed capital allowance on or one you’ve included as an expense when working out your business’s profits.
Can I claim the costs of a new vehicle?
Whether you can claim the costs of an initial vehicle purchase will depend on the accounting method you use. If you use the traditional (accrual) accounting method, you’ll be able to claim the purchase of a vehicle as capital allowance. This also applies if you’re using a cash basis accounting method, providing you’re not using simplified expenses too. However, if you’re using the simplified method you can claim the interest on the loan used to purchase the vehicle (if applicable).
How SixtyFour8 can help
If you’re confused by self-employed courier tax and don’t know if the allowable or simplified expense method would suit you best, we can help! Our team of professional, personal accountants can recommend the best method to suit you and your requirements and will always ensure that your self-assessment tax return is submitted on time year after year. Get in touch with us today or call us on 01633 2882999 for more info.
Ready to get started on your journey to being a self-employed courier or delivery driver? Check out our full guide on becoming self-employed, next.