How much tax will I pay as a private hire driver?
Your tax bill is based on your profit, not your fares. This page shows how that profit is taxed, with a worked example for the 2025/26 tax year.
The short answer
You pay tax on your profit, which is your income minus your allowable expenses. You do not pay tax on your full fares.
On that profit you pay two things: Income Tax and Class 4 National Insurance. How much depends on the size of your profit and any other income you have in the same tax year.
Most drivers pay nothing on the first £12,570 of profit, then 20% Income Tax and 6% National Insurance on profit above that. The figures and bands below are for 2025/26, the tax year that runs from 6 April 2025 to 5 April 2026.
Your profit starts with the right income figure. For most platform drivers that is your gross fares, not the amount paid into your bank. If you are not sure which figure to use, read what counts as your income first.
Income Tax rates for 2025/26
Income Tax is charged in bands. Each rate applies only to the slice of profit that falls inside its band, not to your whole profit.
| Band | Taxable profit | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The Personal Allowance is the amount you can earn before any Income Tax is due. It is £12,570 for 2025/26. If your total income for the year goes over £100,000 the allowance starts to reduce, but very few drivers reach that level.
These bands apply in England, Wales and Northern Ireland. Scotland sets its own Income Tax bands, so the rates differ if you are a Scottish taxpayer.
National Insurance for 2025/26
As a self-employed driver you pay Class 4 National Insurance on your profit. The rates for 2025/26 are:
- 6% on profit between £12,570 and £50,270
- 2% on profit above £50,270
Class 2 National Insurance used to be a separate weekly charge. It is no longer compulsory. If your profit is above the small profits threshold of £6,845, you are treated as having paid Class 2, and it costs you nothing. You build up your state pension record through your Class 4 contributions instead.
If your profit is below £6,845, you can choose to pay Class 2 voluntarily at £3.50 a week to protect your state pension record. That is a decision worth taking advice on rather than guessing at.
A worked example
This example uses a taxable profit of £25,000 to show how the bands work. It is only an illustration of the method. Your own profit will depend on your income and your expenses, so do not read this as a typical figure.
| Calculation | Amount |
|---|---|
| Taxable profit | £25,000 |
| Less Personal Allowance | (£12,570) |
| Profit taxed at 20% | £12,430 |
| Income Tax (20% of £12,430) | £2,486.00 |
| Class 4 NIC (6% of £12,430) | £745.80 |
| Total tax and National Insurance | £3,231.80 |
So on a £25,000 profit, the bill is £3,231.80, which is about 13% of the profit. The more allowable expenses you record, the lower your profit and the lower your bill.
Your profit is your income minus your allowable costs, so claiming everything you are entitled to makes a real difference. See what expenses you can claim.
If you have other income
Your driving profit is added to any other taxable income you have in the same year, such as a part-time job or a pension. The combined total decides which bands you fall into.
For example, if you earn £20,000 from an employed job and make £15,000 profit from driving, the £12,570 Personal Allowance is used up by the job. Most of your driving profit is then taxed at 20%, because your combined income sits inside the basic rate band.
Payment on account
The first time you file, your bill can be larger than expected. This is because HMRC often asks for payments towards next year's tax at the same time. It catches a lot of new drivers out.
Payment on account is the single biggest surprise for first-time filers. We are preparing a dedicated page that explains how it works and when it applies. In the meantime, if you have had a bill that looks too high, it is worth checking whether part of it is an advance payment rather than tax you owe for the year just gone.
Setting money aside
Tax is not taken at source when you drive, so you need to set it aside yourself. A reasonable starting point is to keep back 25% to 30% of your profit through the year, in a separate account you do not dip into.
That range covers the Income Tax and National Insurance for most drivers in the basic rate band. If your income is variable or comes from more than one platform, a separate savings pot makes the January bill far less painful.
Student loans and Child Benefit
Self Assessment can affect two other things. If you repay a student loan, repayments are calculated through your tax return once your income passes the relevant threshold. If you or your partner claim Child Benefit and either of you earns above £60,000, the High Income Child Benefit Charge may apply, and it is collected through Self Assessment.
Both are easy to miss and both can change your final bill. We check for them on every return we prepare.
Common questions
You pay tax on your profit, which is your income minus your allowable expenses. You do not pay tax on the full fares. Recording all your allowable costs is what keeps your profit, and your bill, down.
Keeping back 25% to 30% of your profit in a separate account works for most drivers in the basic rate band. Higher earners should set aside more, because part of their profit is taxed at 40% with 2% National Insurance on top.
Not as a compulsory charge. If your profit is above £6,845 for 2025/26, Class 2 is treated as paid at no cost, and your state pension record is protected through Class 4. If your profit is below that, you can pay Class 2 voluntarily at £3.50 a week.
For the 2025/26 tax year, the deadline to file online and pay is 31 January 2027. If your bill is over £1,000, HMRC may also ask for payments on account towards the following year, due in January and July.
It can. If you or your partner claim Child Benefit and either of you has income above £60,000, the High Income Child Benefit Charge may apply. It is worked out and collected through Self Assessment.
This page is general guidance, not advice for your own circumstances. It was correct as at the date shown at the top, and tax rules and rates change over time. Please take advice on your own position before acting on anything here.
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