Registering as self-employed for the first time: a step-by-step for new taxi drivers
Just picked up your taxi licence? Here's exactly what to sort with HMRC in your first few weeks, in the right order, so nothing catches you out later.
Getting your taxi licence sorted feels like the big hurdle. Then you drive your first fare, and a few weeks later it dawns on you: you’re now running a business, and HMRC needs to know about it. Here’s the order to do things in, without the jargon.
1. Get HMRC told you’re self-employed
As soon as you start driving for a living, you’re self-employed in the eyes of HMRC - full stop, whether you’re doing it full-time or alongside another job. You don’t need to tell them on day one, but there’s a real deadline: you must register for Self Assessment by 5 October following the end of the tax year in which you started. So if you start driving any time between 6 April 2026 and 5 April 2027, you need to be registered by 5 October 2027. Miss it, and you can be fined even if you’d have owed no tax at all - so don’t leave it to the last minute. We’ve written a fuller Self Assessment deadlines guide if you want the whole calendar in one place.
2. Get your Government Gateway account and UTR
Registering gets you two things: a Government Gateway account (your login for anything HMRC-related online) and a UTR - Unique Taxpayer Reference, a 10-digit number that identifies you for tax purposes for the rest of your working life. Keep it somewhere safe; you’ll need it every year. This step trips a lot of new drivers up, mostly because HMRC’s online registration process wasn’t built with a business’s day-to-day in mind. It’s one of the things we do for you as standard on our Bronze plan.
3. Understand what happens with National Insurance
Historically, self-employed drivers had to separately register for and pay Class 2 National Insurance. That’s changed: if your profits are above the Small Profits Threshold, you’re now treated as having paid Class 2 automatically through your Self Assessment return - no separate registration needed. If your profits are lower, paying Class 2 voluntarily is still worth considering, because it protects your State Pension record for a few pounds a week. We cover this properly in our State Pension forecasts piece - worth a read even in year one, because the earlier you understand it, the fewer gaps you’ll ever have to fill.
4. Start keeping records from your very first fare, not your first panic
You don’t need anything fancy. What you do need is a habit: log your income and your expenses as you go, not from memory in January. Since April 2024, “cash basis” accounting - recording money as it actually comes in and goes out, rather than complicated accruals - is the default for sole traders, which makes this genuinely simple to keep on top of yourself if you start early. We supply every client with an Income & Expenditure recording system from day one, and we’ve written a plain-English guide to actually using one without it becoming a chore.
5. Know what you can and can’t claim before you spend
A lot of new drivers either under-claim (missing out on money that’s rightfully theirs) or over-claim (setting themselves up for a difficult conversation with HMRC later). Fuel, a portion of your phone bill, your taxi licence fee, and vehicle running costs are all fair game in the right circumstances - see our expenses guide for the detail.
6. Put tax money aside as you earn it, every single week
This is the step almost nobody tells you about, and it’s the one that causes the most stress. Your first tax bill doesn’t arrive until 31 January after your first full tax year - by which point you may owe a full year’s tax plus a payment on account towards the next year, all at once. Getting into the habit of setting aside a percentage of every week’s takings, from week one, is the single easiest way to avoid that shock.
We do the paperwork. You keep driving.
Our Bronze plan is built specifically for drivers just starting out: we register you for Self Assessment, register you with HMRC, and supply your Income & Expenditure recording system, all from £45 a month by direct debit. Give Michael a ring on 07799 414972 for a free, no-obligation chat about getting set up properly from day one.