Starting from 2 October 2023, taxi drivers in Northern Ireland and Scotland need to complete new HM Revenue and Customs (HMRC) tax checks when renewing their licence.
These checks were introduced in England and Wales in April 2022 and have a straightforward online process to confirm tax registration for income from licensed taxis when applying or renewing operating licences. More than 120,000 people have gone through this process in England and Wales since then.
The introduction of these checks marks a significant step in promoting tax compliance within the industry across the UK and making it fairer to the majority of drivers who already pay their taxes correctly. The Department for Infrastructure will administer the process in Northern Ireland, while local councils will in Scotland – ensuring applicants complete the tax check before their licence applications are considered. In Scotland those renewing their licence to operate a booking office will also need to complete the tax checks.
What the check involves
With a Government Gateway account, completing the tax check on GOV.UK
should be quick, simple and straightforward. After answering a few questions about your tax registration, HMRC will provide applicants with a tax check code. This code must be given to the licensing body before they can proceed with your licence renewal application.
HMRC recommend that applicants, if they do not already have a Government Gateway account, go to GOV.UK and search ‘register for HMRC services’ to sign up. Anyone who needs extra support will be able to complete the tax check by phone through HMRC's customer helpline.
The licensing body will only use the code to confirm that someone has completed a tax check with HMRC. They won't have access to information about your tax affairs.
If you have not used your taxi licence, you will still need to complete the tax check if renewing.
The only time you won’t need to do the tax check is if you are applying for a licence for the first time or held a licence that expired more than a year ago.
However, the licensing body will ask you to read HMRC guidance on what you need to do to be properly registered for tax in the future and you’ll need to confirm you have done this.
I haven’t registered for tax, what should I do? If you haven’t registered to pay tax on earnings from your licensed trade, please go to GOV.UK to check if you need to register as soon as possible by searching ‘how you pay income tax’. If you should have been registered to pay tax, HMRC will work with you promptly and professionally to get you back on the right track. It’s your responsibility to get your tax right, but HMRC is here to help.
You can get help from HMRC if you need extra support, for example if you require information in a different format or want help filling in forms. Visit GOV.UK and search ‘Get help from HMRC if you need extra support’.
Why is HMRC implementing this check?
The aim of these rules is to level the playing field and combat the hidden economy, estimated to cost the UK Government £2 billion in unpaid taxes, which deprives funds for the vital public services we all rely on. By linking tax compliance to licence renewal, the Government hopes to discourage participation in the hidden economy and encourage drivers and operators to fulfil their tax obligations.
The introduction of this tax check is a collaborative effort between HMRC, sector representatives, and licensing bodies across the UK. Full guidance has been published on GOV.UK to support you with the changes. Go to GOV.UK and search ‘complete a tax check’. As these tax checks come into effect, they will play a crucial role in ensuring a fair and transparent industry for all involved.