Self Employed Deliveroo Rider? Here is our tax advice guide just for you. Whether you are starting out or just want to understand more about allowable expenses, here are some useful tips specifically for Self Employed Deliveroo Riders.
THE FOUR ESSENTIALS OF SELF EMPLOYMENT
Although the current arrangements are being contested, currently Deliveroo requires its Riders to be Self Employed so let’s start by summarising the four essential elements of Self Employment:
- Visit the HMRC website and register as Self Employed;
- Keep a list and receipts of all business income and expenses;
- Complete Self Assessment before 31 January each year summarising your business income and expenses;
- Pay any Tax and National Insurance due by 31 January each year (and payments on account by 31 January and 31 July each year).
Register with HMRC as a Self Employed Deliveroo Rider
First things first, you must register with HMRC for Self Assessment and National Insurance. This should be done as soon as possible after starting work as an Deliveroo Rider but HMRC rules are that you must register by 5 October in your business’s second tax year.
You can register online as a Self Employed Deliveroo Rider on the HMRC website. The process can take 10 days to complete upon which HMRC will post you a UTR number (Unique Tax Payers Reference). Keep this safe as you will need this code to file your Self Assessment Tax Return. Self Employed Individuals are responsible for reporting their income to HMRC under Self Assessment by submitting a personal Tax Return by 31 January each year detailing your income as an Deliveroo Rider, the income tax and Class 2 & Class 4 National Insurance due as well as making a payment for the tax and NI due. Your tax return submitted by 31 January covers the previous tax year (a tax year runs from 6 April to 5 April). So for example, your tax return due by 31 January 2018 details your earnings between 6 April 2016 to 5 April 2017 and this will include your income as a Deliveroo Rider as well as any other earnings you may have (such as rental income, bank interest or dividends).
Watch out, you are also required to make a payment on account to HMRC by 31 July each year too which is normally 50% of your previous years tax bill, so make sure you budget for this additional payment too.
It is also worth noting that if you already complete a Self Assessment Tax Return, for example because you collect rental income or have savings interest, that you need to complete a Form CWF1 to notify HMRC that you have a new form of income you need to report on. Again, you can do this online here and you will need your Unique Tax Payers Reference.
WHAT ARE ALLOWABLE EXPENSES?
Your trading income, somewhat deceivingly, actually means your trading profits (all your income less all your allowable business expenses) and it is this figure that your tax and national insurance bill is based on. Generally speaking, business expenses are only tax allowable if they are ‘wholly, necessarily and exclusively’ incurred in the performance of your business. But it is really important to be aware of which expenses are allowable because they will reduce your tax bill and incorrect claims can result in penalties. Expenses must be supported by a receipt, so always make sure you keep hold of all your paper or emailed receipts so they are ready for tax time.
Typical Allowable Expenses for Self Employed Deliveroo Riders
To register as a Deliveroo Rider you will need a moped, bike or scooter and safety equipment as well as a smart phone. The cost of these items would be tax allowable, although if there is an element of personal use on these items you would need to reduce your claim for this. For example, it is common to use a smart phone for work and personal uses, in this case you should make a reasonable apportionment so you can claim the business use amount against your tax such as 80% business and 20% personal.
Here are some other typical expenses you may have to pay for that can be deduct against your income for tax purposes:
- Deliveroo commissions and service charges;
- Parking charges (fines are not allowed);
- Bike maintenance such as brake pads, tyre replacement;
- Accountants fees;
- Bank charges of a business bank account.
RECORDING YOUR BUSINESS TRANSACTIONS
It is likely you may be paid in cash or via bank transfer and, like any self employed sole trader, it’s important to keep accurate business activity records and be aware of any entitlements or tax relief that you may be eligible for. Doing so will make life easier when the time comes to completing Self Assessment. Incomplete or inaccurate records will demand more time and hike up any accounting costs. Don’t forget that failure to declare all forms of income could result in prosecution and a fine from HMRC. Accurate returns are important as they affect a person’s eligibility and ability to get things like mortgages and other types of credit finance.
A simple spreadsheet which records your income and expenses is a great start to keeping your business transactions logged and organised. You read some of our tips to keeping your accounts organised here.
You must keep your records and receipts for at least 5 years after the 31 January submission deadline of the relevant tax year. For Example: If you sent your 2016 to 2017 tax return online by 31 January 2018, you must keep your records until at least the end of January 2023.