Quick guide to HMRC’s new MAKING TAX DIGITAL rules for taxi and private hire drivers
- Perry Richardson
- 12 minutes ago
- 2 min read
Taxi and private hire drivers are facing significant changes to the way they report their earnings, with Making Tax Digital set to become a legal requirement for thousands of self-employed cabbies from April 2026.
TaxiPoint spoke to Vatax Accounting to outline what the shift to quarterly digital reporting will mean in practical terms for drivers across the sector, particularly those operating as sole traders.
Under the new regime, drivers above certain income thresholds will need to submit digital updates to HMRC every three months rather than filing a single annual tax return. With non-compliance triggering penalty points and fines the move represents an operational change that could affect record-keeping, software choices and day-to-day admin for many in the trade.
Below, Vatax Accounting answers key questions on who is affected first, what systems are required and how drivers can prepare.
What exactly is Making Tax Digital, and why should taxi and PHV drivers care right now?
It is a new way of recording the trader account’s income and expenditure to be reported to HMRC on a quarterly basis rather than once a year. It is becoming a legal requirement and noncompliance will result in fines levied by HMRC.
Which taxi and PHV drivers will be affected first, and when does MTD actually start for them?
All self-employed drivers who TAKE before any costs £50,000 per year commencing from 6th April 2026.
How often will taxi and PHV drivers have to submit information to HMRC under MTD, and what’s the real workload increase?
Every 3 months plus a final return at end of the year. Real work increase will depend on how records are kept at present.
What software do taxi and PHV drivers actually need—spreadsheets, apps, or full accounting software?
Either an accountancy software package or basic records passed on to bookkeeper agent to prepare for HMRC submission.
What penalties are drivers facing if they get MTD wrong or miss submissions? If a cabbie ignores MTD and hopes for the best, what can they expect from HMRC?
HMRC basing fines on a penalty point system after 2 points fines start at £200 and rise according to continued noncompliance.
What should a driver be doing in the lead up to prepare, even if MTD doesn’t apply to them yet?
Although only drivers with a turnover above £50k are effected this year, from 2027 drivers with a turnover of £30k and from 2028 with a turnover of £20k all will be required to use the MTD system Therefore it would be best if drivers all set up systems that create digital records either by their own software package or through an agent.
