What can taxi drivers actually claim as an expense?

Every allowable expense you don’t claim is tax you’ve paid that you didn’t have to. Every driver we sit down with has missed something - usually because the rules genuinely aren’t explained anywhere in plain English. Here’s what’s actually claimable.

Your vehicle: pick one method and stick with it

This is the big one, and the one most likely to be done wrong. You have two options for claiming vehicle costs, and HMRC is strict that you cannot mix them for the same vehicle:

• The flat mileage rate (simplified expenses) - you claim a set amount per business mile instead of tracking every fuel receipt and repair bill. From 6 April 2026, that rate is 55p per mile for the first 10,000 business miles in the tax year, then 25p per mile after that.
• Actual costs - you claim your real fuel, insurance, repairs, servicing, MOT, vehicle tax, and breakdown cover, apportioned for any private use, plus capital allowances on the vehicle itself.

Whichever you choose for a given vehicle, you’re expected to keep using that method for as long as you own it. For most single-vehicle drivers doing high annual mileage, the flat rate is simpler to keep on top of; if your vehicle costs are unusually high (a newer, more expensive car, for instance), actual costs can sometimes work out better. This is exactly the kind of decision worth a five-minute conversation with us before you commit, since switching later isn’t straightforward.

The £1,000 trading allowance

If your total expenses for the year come to less than £1,000, you can claim the flat £1,000 trading allowance instead of itemising anything - it’s one or the other, not both on top of each other. Most full-time drivers will do better claiming actual expenses or mileage, but it’s worth knowing this exists, especially if you’re only driving part-time.

What else you can claim

• Your mobile phone - the business-use proportion, if you also use it personally.
• Accountancy and professional fees for your business.
• A share of your household costs if you do any admin from home - heating, electricity, and similar, apportioned fairly.
• Trade or professional body subscriptions.
• Required uniform or protective clothing - not everyday clothes, but anything you’re specifically required to wear for the job.
• Business insurance.
• Parking and tolls incurred while working.

Your taxi driver’s licence fee, vehicle licensing costs, and any commission or service fees paid to a platform like Uber or Bolt are, in our experience, generally allowable as a direct cost of running your business - but HMRC’s published guidance doesn’t spell these out by name for taxi drivers specifically, so we’d rather confirm your exact position with you than print a blanket rule here.

What you can’t claim

• Fines and penalty charges - parking tickets, speeding fines, and the like are never allowable, however work-related the journey was.
• Entertaining clients or customers.
• Everyday clothing that isn’t a required uniform.
• Ordinary commuting from home to a fixed workplace - though this rule was written with a fixed office in mind, not a trade where the vehicle itself is the workplace, so how it applies to your own pattern of driving is genuinely worth talking through with us rather than guessing.

The real cost of guessing wrong

Under-claim, and you’re quietly overpaying tax every single year. Over-claim, and you’re building a return that won’t hold up if HMRC ever asks a question about it. Getting this right once, at the start, is worth far more than trying to unpick it later.

Every plan we offer includes a proper review of your income and expenditure and tax-saving recommendations specific to how you actually work. Ring Michael on 07799 414972 and we’ll go through your own numbers with you, free of charge.