However, you may wish to make voluntary contributions to ensure you’re eligible for a state pension or other benefits.įor more info on this, check out the gov.uk page on self-employed National Insurance rates. If your annual profits are under £6,475, then you don’t have to pay National Insurance contributions. Your total Class 2 and Class 4 National Insurance contributions for the year would therefore be £1,553.60 (£158.60 + £1,395).On this £15,500, you would pay 9% Class 4 National Insurance, so a total of £1,395.You would pay no Class 4 National Insurance on £9,500, leaving £15,500 to be taxed at the relevant rate.You would pay annual Class 2 National Insurance contributions of £158.60 (£3.05 x 52 weeks).Here’s how it works based on the thresholds for the 2020-21 tax year: Again, this is based on your profits, with most self-employed people paying both Class 2 and Class 4 contributions. Of course, as we’ll see later, claiming your relevant expenses can reduce the amount of tax you need to pay.Īs a sole trader, you’ll also need to pay National Insurance (a special tax that pays for certain benefits and the State Pension).
(The same applies if you’re a partner in a business partnership, but this is a very uncommon structure for taxi drivers).Īs you probably know, the amount of tax you’ll pay is determined by your annual profit, with different bands for different levels of income (see the table below).
What this means in terms of tax is, as long as their annual income exceeds £1,000 (the tax-free trading allowance), they must complete a self-assessment tax return for the relevant tax year and pay the appropriate tax and National Insurance contributions.
UBER DRIVER INCOME AND EXPENSES WORKSHEET DRIVERS
The vast majority of taxi drivers work as self-employed ‘sole traders’. Taxi driver income tax (including National Insurance)
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