Self-Assessment Threshold Rises: What it means for taxi and private hire drivers
Thousands of taxi and private hire drivers may no longer need to file a Self-Assessment tax return under new government plans to simplify the tax system.
The threshold for reporting trading income through Self-Assessment is set to increase from £1,000 to £3,000 gross within this parliament. This means drivers earning under this new limit will no longer be required to submit a tax return, reducing administrative burdens for many in the industry.
An estimated 300,000 taxpayers are expected to benefit from this change, including self-employed drivers and those operating in the gig economy. Around 90,000 of them will have no tax to pay and will be removed from the reporting system entirely. Others will be able to use a streamlined online service to settle any tax owed.
The move is part of a wider push to modernise HMRC and make tax compliance more efficient. By raising the threshold, the Government aims to cut red tape and free up time for self-employed workers, including taxi and private hire drivers, who often juggle complex financial reporting alongside their daily work.
Drivers earning above £3,000 gross will still need to declare their income as usual. However, those working part-time or using taxi driving as a side income could see a significant reduction in paperwork and associated costs.
James Murray, the minister responsible for HMRC, is expected to outline further plans to tackle tax fraud and streamline customs procedures in a speech marking the 20th anniversary of the tax authority. The Government says these reforms are part of a wider economic strategy to support self-employed workers and businesses across the UK.
For taxi and private hire drivers, these changes could mean fewer administrative hurdles and a more straightforward approach to managing tax obligations. However, those earning above the new threshold will still need to ensure compliance with existing tax rules.
Exchequer Secretary to the Treasury, James Murray, said: “From trading old games to creating content on social media, we are changing the way HMRC works to make it easier for Brits to make the very most of their entrepreneurial spirit.
“Taking hundreds of thousands of people out of filing tax returns means less time filling out forms and more time for them to grow their side-hustle.
“We are going further and faster to overhaul the way HMRC works to make sure it delivers the Plan for Change that will help put more money in people’s pockets.”
Ellen Milner, Director of Public Policy, Chartered Institute of Taxation, said: “We welcome the government’s focus on simplifying the tax system and improving customer service – rightly two key priorities for HMRC as the tax authority heads into its third decade. A more straightforward, easy to navigate tax system could free up business owners and managers to focus on growing their businesses, rather than spending their days overcoming bureaucratic hurdles. We especially welcome the announcement of a new approach to dealing with slow-moving income tax queries from agents. Hopefully, in due course, this can be expanded to unrepresented taxpayers and to other taxes.”
The changes to the Self-Assessment threshold will affect a broad range of self-employed individuals and those with side incomes. Alongside taxi and private hire drivers, those likely to benefit include:
Online sellers – Individuals who trade items like vintage clothing, electronics, or handmade crafts on platforms such as eBay, Depop, or Etsy.
Gig economy workers – People working on apps like Uber Eats, Deliveroo, TaskRabbit, and similar platforms.
Freelancers – Those offering services such as writing, graphic design, consulting, or tutoring.
Content creators – YouTubers, TikTokers, bloggers, and others earning through ad revenue, sponsorships, or affiliate marketing.
Dog walkers and pet sitters – Individuals providing pet care services on a casual or self-employed basis.
Gardeners and handymen – People offering services such as lawn care, landscaping, or odd jobs.
