Updated: Oct 31, 2021
HMRC are stepping up their campaign to notify and prepare ALL licensed taxi and private hire drivers of tax changes happening next year.
From April 2022, HM Revenue and Customs (HMRC) is introducing a new tax check that must be completed when people RENEW their licences to drive taxis, drive and operate private hire vehicles, or deal in scrap metal in England and Wales.
The digital tax check service will not be available until early next year, but HMRC wants people to prepare as early as possible by making sure they are registered to pay the appropriate taxes on their licensed income ahead of the changes.
You’ll need to complete the tax check when you renew your licence as a:
Driver of a taxi (hackney carriage)
Driver of a private hire vehicle (and dual licences)
Private hire vehicle operator.
The renewal of these licences will only be given if the person applying can show they have completed the simple tax check with HMRC.
The check will not include any calculations, it is simply to confirm that someone is appropriately registered for tax on their licensed income.
HMRC has designed the tax check to be quick and straightforward to complete and it will only be required every few years. It will form a small part of a much wider range of checks that licensees are already required to carry out.
What you need to do now to prepare for the check:
If you’ve not registered to pay tax on earnings from your licensed trade, you should go to GOV.UK to check if you need to register as soon as possible.
If you’re an employee, find information on PAYE at www.gov.uk/income-tax/how-you-pay-income-tax
If you’re self-employed, find information on registering for Self Assessment at www.gov.uk/register-for-self-assessment
If you operate through a company, find information on Corporation Tax at www.gov.uk/corporation-tax.
If you should have been registered to pay tax and have not been, HMRC have said they will work with drivers to get them ‘back on the right track’. It is however the driver’s responsibility to get their tax right, despite HMRC being there to help.
A HMRC spokesperson said: “This is about creating a level playing field for the compliant majority in these sectors, so the majority who do play by the rules won’t be disadvantaged by the minority who do not.”
These new rules will differ depending on whether the licence applicant is new or already licensed.
New licensees: If a taxi and private hire driver is applying for a licence for the first time, they will not need to complete the tax check. However, licensing bodies will ask cabbies to read HMRC guidance on what they need to do to be properly registered for tax in the future and the driver will need to confirm they have done this.
Renewing a licence: From 4 April 2022, if a currently licensed cabbie renews or apply for a subsequent licence under a different licensing body, they will have to do a tax check. They will be able to do this online through the digital service.
How do I complete a tax check?
You will be able to complete this tax check on GOV.UK, through your Government Gateway account. You will only need to answer a few questions to tell HMRC how you pay any tax that may be due on income you earn from your licensed trade. If you do not already have a Government Gateway account, you can sign up on GOV.UK. The tax check should only take a few minutes.
When you’ve completed the tax check, you’ll get a code. You must give this code to your licensing body. The licensing body cannot proceed with your licence application until the tax check is completed and they’ve received the code.
Your licensing body will only receive confirmation from HMRC that you’ve completed the tax check, they will not have access to your tax affairs.