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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4972
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I work as a taxi driver at a cab company that owns

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I work as a taxi driver at a cab company that owns several cabs, but which does not employ the drivers directly; i.e. we are treated as self-employed and told to pay our own national insurance contributions. No P45 forms are issued.
There are two distinct types of driving work that the drivers perform:
The first is freelance Hackney Carriage taxi work, in which individual drivers search for customers in town, and/or receive telephone bookings through the central booking line of the taxi company that owns the cabs we rent. The driver collects the fares for each journey, and is invoiced weekly by the taxi owner for a share of the fare, which is supposed to represent the charge for the use of the vehicle. Fuel used is billed as a separate item.
The second type of work involves completing driving tasks for the same cab company at specific times for an agreed amount of driving hours in fulfilment of contracts that the cab company has been awarded by town hall and/or county hall; e.g. transporting kids to school each weekday. For these engagements, the driver receives a weekly pay advice, and the total amount of hourly pay is transferred directly to the driver's bank account by the cab company - not the entity that actually contracted the service.
The former case seems to me to be a fairly reasonable example of what UK tax law deems to be self-employment. I am unsure about the second type of work for which a pay-advice is generated. Can this be regarded as a form of employment (instead of self-employment) for the purposes of completing my UK tax return? Should it be regarded as employment rather than self-employment?
Kind regards
Jonathan Targett
Submitted: 1 year ago.
Category: Tax
Expert: replied 1 year ago.
Thank you for your question..The cab company is a contractor in your second scenario and the contractor outsources this task to its drivers who are not on the payroll.You are remunerated for the hours worked by the cab company and not the customer/client.In my opinion you can regard both scenarios as self employment and show total income as income from self employment.I hope this is helpful and answers your question.If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.
Expert: replied 1 year ago.
You have not stated if any tax and/or NI are deducted on this weekly pay advice.. Many thanks
Customer: replied 1 year ago.
No taxes or NI contributions are deducted on the weekly pay advice apart from VAT on the fuel used. I think that this supports the description of the situation that you have given.According to the UK tax software I'm using it may actually be beneficial to classify the contractor income that is reported to me on a pay slip as employment income rather than self-employment income.Are there specific rules that HMRC applies to ensure that taxpayers classify such income as self-employment rather than employment income? If so, in what HMRC publication are they published?Thank you
Expert: replied 1 year ago.
Thank you for your reply.For it to be employment income, the contractor should have operated PAYE and deducted Tax and NI on your weekly pay advice. Also you should have been allocated a tax code and you should receive a P60 at the end of the year to show total pay and tax deducted. These figures would be input on your tax return.If your contractor did not treat you as an employee then this income is income from self employment.There is guidance issued by HMRC to help decide the employment status of worker and the link is here my view your earnings from school runs is income from self employment. I hope this is helpful and answers your question.I will appreciate if you would kindly rate my service/accept the service I have provided before you leave the site, to ensure I get credited for it by Just Answer. and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Great. I think that covers it.
I've submitted a rating; 5 stars.Thanks and goodbye.
Expert: replied 1 year ago.
I thank you for accepting my answer. Best wishes.
Expert: replied 1 year ago.
Your reward of a generous bonus is greatly appreciated.

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