HMRC TAXI DRIVER DEADLINE LOOMS: First set of Taxi and PHV earnings from digital platforms due by 31 January 2025
HMRC has introduced new tax reporting requirements for taxi and private hire vehicle (PHV) operators using digital platforms, significantly impacting how these businesses report driver earnings. The first year of reported earnings under this system is set to be delivered to HMRC by 31 January 2025, marking a shift in tax transparency for the sector.
The new rules apply to what HMRC has defined as Reporting Platform Operators (RPOs). These are taxi and PHV operators who use digital platforms to manage bookings, dispatch services, and facilitate payments. Under this new legislation, any RPO must submit detailed annual reports regarding driver earnings to HMRC. This reporting requirement applies to each driver, referred to by HMRC as a “Reportable Seller”, who is identified as having earned income through the platform during a given reporting period.
What Taxi and PHV Operators Need to Know
Under this new system, the onus is on the RPOs to ensure they comply with the new reporting obligations. For the 2024 tax year, RPOs will need to submit their first round of information to HMRC by 31 January 2025. For every subsequent year, the reporting period will follow this same pattern. The information must cover the entirety of a Reportable Period – for example, the year from 1 January 2024 to 31 December 2024.
In practice, this means that RPOs will be responsible for gathering accurate data on the earnings of every driver or operator who has used their platform during the reporting period. Whether drivers work full-time or occasionally use the platform, their income needs to be accounted for in the RPO’s submission.
The Reporting Process
Reports are submitted annually via an online portal on the gov.uk website. This portal serves as the main interface for RPOs to upload and submit their data. Although the report is only required once per year, RPOs are encouraged to regularly update the portal throughout the year, ensuring that all the necessary information is in place ahead of the deadline.
If any errors or discrepancies are identified after the report has been submitted, RPOs are able to make corrections, even after the reporting deadline has passed. This allows for flexibility in addressing any mistakes or omissions in previously submitted information, ensuring that all data is accurate.
Importantly, the reports must include specific details on each driver who meets the definition of a Reportable Seller. This includes not only their earnings but potentially other identifying details that HMRC may require to ensure full compliance with tax reporting regulations.
Why Is This Happening?
The move to introduce these reporting obligations is part of HMRC’s wider effort to increase transparency around earnings from digital platforms. Taxi and PHV operators increasingly rely on online systems to manage their services, and HMRC is keen to ensure that earnings from these digital platforms are properly tracked for tax purposes.
This shift aligns with HMRC’s broader “Making Tax Digital” initiative, which has sought to modernise the way businesses and individuals interact with the tax system. Digital platforms represent a growing part of the economy, and these new rules aim to ensure that income generated through such platforms is reported in line with existing tax laws.
What Happens If RPOs Fail to Comply?
RPOs must be vigilant in meeting these new obligations, as failure to comply with the reporting requirements could result in penalties. If reports are not submitted on time, or if they contain inaccurate or incomplete information, RPOs could face enforcement action from HMRC. It is crucial for operators to understand these new rules and prepare for the submission deadlines to avoid any potential legal or financial consequences.
The introduction of these rules marks a significant shift in how the taxi and PHV industry is regulated from a tax perspective. Operators and drivers alike will need to adjust to the new reporting environment, with the deadline of 31 January 2025 looming for the first submission.
