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HMRC begins automatically signing up taxi and PHV drivers for Making Tax Digital
Taxi and private hire vehicle drivers are among the self-employed workers being automatically signed up by HM Revenue and Customs for Making Tax Digital for Income Tax after failing to enrol themselves or through an accountant.
The action applies to sole traders and landlords whose combined qualifying gross income exceeded £50,000 in the 2024/25 tax year. Unless exempt, they have been required to use the system since 6 April 2026. The threshold concerns income before expenses are deducted, rather than taxable profit.
HMRC said it began signing up affected taxpayers in stages from September 2026 because its records indicated they had crossed the £50,000 threshold but had not completed registration. Drivers may receive confirmation through their HMRC online account or by post.
The automatic enrolment does not mean taxi and PHV drivers have been selected as a separate occupational group. Many drivers operate as sole traders, however, making the trade particularly exposed to the change.
HMRC is using income reported through Self Assessment to identify people who appear to meet the statutory criteria.
Once enrolled, a driver must access HMRC online services using their Self Assessment sign-in details and select Making Tax Digital for Income Tax. They must then review the self-employment and property-income records held by HMRC, confirming existing income sources and adding any new businesses or property income.
Drivers should check this information carefully because HMRC may initially have relied on the position shown in their 2024/25 return. It will also consider the 2025/26 return where that was submitted before enrolment. A driver who stopped trading, began a different business or experienced another material change may therefore need to update the information.
Eligible drivers must obtain compatible commercial software. HMRC does not supply its own bookkeeping product, although its software directory includes free and paid options. The selected product must be capable of maintaining digital income and expense records, submitting quarterly summaries and completing the driver’s tax return.
Where a driver has been signed up after the start of the tax year, the obligation does not begin from the date of HMRC’s letter. The taxpayer must bring digital records up to date from 6 April 2026 and submit any overdue quarterly update as soon as possible.
These quarterly submissions contain totals drawn from the digital records and are not separate tax returns. Drivers must still complete their annual tax return and pay the full amount due by 31 January following the end of the tax year.
HMRC says taxpayers will not receive penalty points for late quarterly updates during 2026/27. Digital records must still be kept, however, and the final quarterly update must be submitted before the annual return can be completed. Penalties can continue to apply if the tax return itself is filed late.
For taxi and PHV drivers, the immediate issue is reconstructing records from the beginning of the tax year. That could involve bringing together meter takings, cash fares, card payments, account work and app bookings, alongside commissions and allowable business expenses.
Statements from booking platforms or bank deposits alone may not provide the complete income figure required. A net payment received after commission can differ from the gross fare income that needs to appear in the driver’s business records, with the commission recorded separately as an expense where appropriate.
Drivers who believe HMRC has enrolled them incorrectly should contact Self Assessment rather than ignore the notice. An exemption may be available where digital exclusion means it is not reasonable for the person to use compatible software, but exemption is not automatic and must be accepted by HMRC.
Anyone whose entire self-employment or property business ended before 6 April 2026 must update their HMRC account and still submit the 2025/26 return. If all relevant income sources ceased on or after 6 April, the person must generally use MTD up to the cessation date and submit the 2026/27 return before the obligation ends.
