VAT
VAT Registration & Returns for Uber Drivers
Once your turnover passes £90,000 in any rolling 12 months, VAT registration stops being optional. Get the timing wrong and you owe VAT you never collected. Get the scheme wrong and you hand over thousands more than you need to.
£90,000
Registration threshold
Rolling 12 months
10%
Flat Rate Scheme, taxis
1% discount in year one
20%
Standard VAT rate
On what you charge
16.5%
Limited cost rate
If you spend little on goods
The Problem
The problem: "rolling" is the word that costs drivers money
The VAT threshold is not measured against your tax year or your accounting year. At the end of every single month you look back over the previous twelve and ask whether your taxable turnover has passed £90,000. A driver who has a strong autumn can cross the line in November even though their April-to-April figure looks perfectly safe.
Miss the moment and HMRC can register you from the date you should have registered and assess the VAT that should have been accounted for from then. You cannot go back and add VAT to fares that have already been taken — so it comes out of your own pocket, with penalties on top.
And once again it is measured on gross turnover, not profit. Drivers who feel a long way from £90,000 in take-home terms are often much closer than they think.
What we do for you
- Your rolling 12-month turnover monitored so you never register late
- Flat Rate Scheme vs. standard VAT modelled on your real numbers
- The limited cost business test checked against your vehicle arrangement
- Registration handled end to end with HMRC
- Quarterly VAT returns prepared and filed under MTD for VAT
- Advance warning of every payment date and amount
- Deregistration handled if your turnover drops below the threshold
Standard VAT or the Flat Rate Scheme?
Under standard VAT accounting you charge 20%, reclaim the VAT on what you buy, and pay HMRC the difference. It suits businesses with large VAT-bearing costs — and drivers often have less reclaimable VAT than they expect. Insurance is exempt, council licensing fees are usually outside the scope, and a used car bought privately carries no reclaimable VAT at all.
Under the Flat Rate Scheme you pay a fixed percentage of your VAT-inclusive turnover and stop tracking VAT on purchases. The category covering taxis and private hire is "transport or storage, including couriers, freight, removals and taxis", and the rate is 10% — reduced by 1% in your first year of registration. You can join if your VAT turnover is £150,000 or less excluding VAT.
For most drivers the Flat Rate Scheme comes out ahead, sometimes by several thousand pounds a year. But not for all of them, which is why we model both on your actual numbers before you commit.
The limited cost business trap
If you spend less than 2% of your turnover on goods — or less than £1,000 a year — you are a "limited cost business" and pay 16.5% instead. At that rate the Flat Rate Scheme is usually not worth having.
Fuel you buy for your own vehicle counts as goods, which normally keeps drivers clear of this. But if you are on a fully maintained lease, or your vehicle costs sit with someone else, you can fall into limited cost territory without realising. It needs checking against your actual arrangement, not assumed.
Should you register voluntarily?
You can register before you hit the threshold, but for most drivers it is a bad idea. Your passengers are not VAT-registered businesses reclaiming the VAT, so it becomes a real cost rather than something that washes through.
There are exceptions, particularly around a large vehicle purchase. We will tell you honestly if you are one of them, and equally honestly if you are not.
How we keep you on the right side of it
The whole thing is straightforward with notice and expensive without it. So we watch the rolling figure for you month by month and tell you when you are approaching the threshold — well before you cross it, not after.
That gives you time to decide on the scheme, plan the registration date, and think about whether your structure still makes sense at that level of turnover.
£90,000 of turnover is a serious business
Drivers approaching the VAT threshold are almost always at the point where the sole trader default is costing them money. It is the right moment to look at VAT and structure together, rather than dealing with one and then discovering the other.
Look at the limited company optionQuestions
VAT questions drivers ask
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