Taxi Driver

Keep your tax affairs moving with the right deductions for licensed taxi drivers.

Allowable Expenses

• Vehicle Costs — Use approved mileage rate (45p/mile) or actual costs — fuel, insurance, servicing, MOT, tyres, and repairs.
• Taxi Licence Fees — Hackney carriage or private hire vehicle and driver licence fees — fully deductible as business licences.
• Radio or Dispatch System — Fees paid to a taxi operator or radio circuit for dispatch and bookings.
• Meter & Accessories — Taximeter installation, credit card machines, roof signs, and in-car partition or screen costs.
• Parking & Waiting Fees — Taxi rank fees, airport holding area charges, and business parking costs.
• Vehicle Cleaning & Valeting — Regular cleaning to maintain passenger standards is a deductible business expense.

Tax Tips

• Cash fares must be declared — HMRC cross-references taxi income against bank deposits and fuel purchases, so keep accurate daily records.
• If you rent your vehicle from a fleet operator, the rental payments are fully deductible.
• Pension contributions reduce your taxable income — consider a SIPP or Nest pension to lower your tax bill.
• The 45p mileage rate covers all running costs — if you use it, you cannot also claim fuel or servicing separately.

Frequently Asked Questions

Do I need to declare cash fares?

Yes. All cash income must be declared on your Self Assessment return. HMRC cross-references reported income against bank deposits, fuel purchases, and lifestyle data. Failing to declare cash income is a serious compliance risk.

Can I claim the taxi vehicle as a business expense?

You cannot claim the purchase price as a one-off expense. Vehicles must be claimed through capital allowances over time. However, if you use the approved mileage rate (45p/mile), it covers all running costs including depreciation.

What records should a taxi driver keep?

Keep daily records of all fares (meter readings, receipts), a mileage log, all receipts for fuel and servicing, licence fee invoices, and bank statements. HMRC expects contemporaneous records — written at the time, not reconstructed later.

Can I deduct radio circuit or dispatch system fees?

Yes. Monthly fees paid to a taxi operator's radio circuit or dispatch system for bookings are a deductible cost of doing business. Keep the payment receipts or bank statements showing the recurring charges.