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Taxi drivers share worries and concerns over new digital HMRC tax reporting rules

Updated: Jan 15

Image generated by DALL.E AI

In a move towards enhancing tax compliance in the digital marketplace, the UK Government has introduced well documented new legislation requiring taxi and private hire operators to report drivers' earnings to Her Majesty's Revenue and Customs (HMRC).

The "Reporting Rules for Digital Platforms", effective from January 2024, are designed to create an equitable environment for businesses in the digital space.

This change mandates all digital taxi and private hire vehicle (PHV) operators in the UK to collect and store revenue data for their drivers. The law, expected to affect approximately 2-5 million digital service businesses, requires annual reporting of driver earnings to HMRC starting January 2025.

To ensure accurate reporting, platforms are already gathering additional driver information, such as National Insurance numbers.

However, drivers have expressed some concerns, particularly regarding potential errors in earnings reporting.

The new system should allow easy tracking of earnings through weekly and annual statements, but they won’t necessarily align with self-assessment tax returns.

A point of contention lies in the different accounting periods; operator statements will cover a calendar year, whereas self-assessment tax returns follow an April-to-April fiscal year. This could lead to more complicated split revenue outcomes.

It’s also important that any discrepancies noticed by drivers on their revenue statements are promptly addressed with respective operators before any information is logged with HMRC. One of the consistent concerns registered by drivers, is what happens if fares are missing and a mistake is made either by the operator or the driver when it comes to matching up the revenue.

Outside of the accounting aspect, some drivers also view this legislation as a means to address fraudulent benefit claims, although the exact number of drivers underreporting earnings, if any, is unknown.

Ahead of the first HMRC submission in January 2025, taxi and PHV apps are already collecting personal tax details, including National Insurance numbers.

It’s also worth noting that the new regulations extend beyond taxi and private hire services, encompassing various digital platform services such as food delivery and freelance work. To comply, companies must gather and share data, including bank account information, with HMRC.

While this legislative change aims to bring fairness and transparency to the digital economy, it also presents some initial unknown challenges and concerns for those operating within it.


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