This case study is based on genuine client work carried out by our practice. Names, figures and identifying details have been changed to protect confidentiality, and the numbers shown are representative of the situation rather than the exact amounts. Your own position will differ.
The scenario
A private hire driver works through an app. Money arrives in the bank weekly, already net of the platform commission. They have been treating what lands in the account as their income, because that is the number they see.
That is the wrong number, and it is wrong in a way that costs them.
Gross, not net
Your turnover is the full fare the passenger paid, not what the app transferred to you. The commission the platform kept is a business expense, which you then deduct.
It sounds like an accounting nicety that nets off to the same answer, and for profit it does. But it matters for two reasons. First, the VAT threshold is tested on gross turnover, and a driver on £75,000 of net receipts might be over £90,000 gross and not know it. Second, if you only ever declare the net figure, your records do not match what the platform reports to HMRC, and platforms now report automatically.
What drivers routinely under claim
This is where the real money is, and most of it is mileage.
You have a choice, and you should make it deliberately because you generally stick with it for that vehicle.
Simplified mileage: 55p a mile for the first 10,000 business miles, 25p thereafter. Covers everything to do with running the car: fuel, insurance, servicing, depreciation, the lot. A driver doing 25,000 business miles has a deduction of £5,500 plus £3,750, so £9,250, with one number and a mileage log.
Actual costs: the business proportion of fuel, insurance, tax, MOT, repairs, cleaning, plus capital allowances on the vehicle. For an expensive or heavily used vehicle this can beat the mileage rate comfortably, but it needs real records.
Beyond the vehicle: the licence, the private hire plate, the app commission itself, phone and data, cleaning, water for passengers, the accountancy fee.
The one thing to get right is that you cannot claim mileage and running costs. It is one or the other.
Why the record keeping matters more now
Platforms report your earnings to HMRC automatically. Your name, your transaction count, your total paid. So the days of an approximate return are over, and a mismatch between what the platform says and what you declared is exactly the sort of thing that generates a letter.
A simple mileage log, start and end odometer readings and a note of business miles, is the single highest value habit here. Without it the largest deduction available to you is unevidenced.
The point of this example
Declare the gross fare and claim the commission, rather than declaring the net and claiming nothing. Then keep a mileage log, because for a driver that one record is usually worth more than every other expense combined.
If you drive through an app and want to know whether you are claiming properly, get in touch.
Driving through an app?
We work out your real income after fees, claim your vehicle and running costs the best way, and file an accurate return, so you keep more of what you earn.