Complete Tax Guide For Taxi/cab Driver Uk [Part 1]
When you are starting your own cab first of all you need to think if your plan comes under “self-employed”. If you are starting with Cab Company on commission basis with job timings decided by company than it will not be considered as “self-employed”. To comply as self-employed there are some conditions to be met like:
– Job timings are decided by person him/herself
– If a self-employed individual does not register his business, but state or local regulations require registration, the individual can be fined and prohibited from conducting business until the business is registered. Since some cities have strict zoning laws concerning home-based businesses, it is a good idea for a self-employed person to check into the local zoning ordinances.
After this normally following questions come in mind: How do I register? – What are the expenses and allowances allowed to claim? Is it difficult completing a tax return online? What is the Tax figure I need to pay.
Above mentioned are important questions. Our guide sets out the basics for getting your tax matter in order and filling in your self-assessment tax return.
Tax penalties are increased from last year, so now filing your tax return swiftly and getting it right first time is more important than ever now. After all, in these difficult times, everyone should be aiming to avoid wasting their hard-earned cash on hefty penalties.
TAX RETURN GUIDE
If you believe you need to complete a tax return, you must inform HM Revenue & Customs (HMRC). There are mainly two forms to use; selecting the right one will depend on your reasons for needing a return:
- If you’re newly self-employed, click on the link below.
- For any other reason, such as you have become a Buy to Let Landlord, you’re likely to need form SA1. HMRC registrations can now be done online on their website..
The information required in these forms is fairly straightforward, such as full name, date of birth and address. You will also need your National Insurance number. If you’re registering as self-employed, you will also need to provide details about your self- employment, such as when you started, your address, the nature of your work, etc.
If you’re completing the registration process using paper forms, the address that you need to send them to once complete can be found on the form. You should always keep a copy of the form and note the date that you sent it.
HMRC will send you a confirmation of registration and provide you with your unique taxpayer’s reference, or UTR. This is a unique reference for your tax affairs. You should quote this on any payments you make or any correspondence to HMRC. They will also ask you for this or your National Insurance number if you ever phone them with a query.
Following the end of the tax year, tax returns must be submitted to HMRC. You can submit your return on paper; this must be done by 31 October following the end of the tax year. Alternatively, you may chose to file your return online, in which case the deadline is extended to the 31 January, following the end of the tax year.
Failing to file your return on time will result in an automatic £100 fine, with further penalties depending on the length of delay. Last year, the penalty rules changed. Previously, if the tax you had to pay on 31 January was less than £100, then your penalty would be reduced to whatever was owed. But this has been scrapped and the £100 penalty is now fixed and automatic.
Any tax you owe must be paid by or on the 31 January following the end of the tax year. There are a number of ways you can pay HMRC, such as Direct Debit, Bank Giro, online banking etc.
As mentioned above, income that has already been taxed must still be declared on your tax return. However, the tax already paid at source will be deducted before arriving at the final tax bill.
Be aware that if your tax liability is over £1,000 or not much of your tax is collected at source, you may be required to make an instalment for next year’s tax as well on 31 January. Again, delaying paying HMRC could cost you interest and late payment penalties.
There are varying lengths that a Taxi Driver should keep its documents for, for different areas of tax. However, six years is the longest of them all, so it would be best practice to stick to this time frame.
HMRC is not very precise about the format of records a business should keep. They are indifferent as to whether a trader should use a manual cashbook or sophisticated bookkeeping programme. Many of our clients simply add up their receipts and enter their transactions directly on to our online forms which are used by us to complete their tax returns, some upload their spreadsheets to their own client login on our website.
When starting out, you may want to begin with simple spreadsheets, a basic record of income and expenses or a cashbook and very quickly you should be able to identify what format your business needs its records in.
Rest of the things will be covered in next blog mainly mentioning expenses covered and allowed under tax laws and useful allowances.