TAXI TAX CHECKS: HMRC runs through NEW cab driver licensing process as ONE-MONTH countdown begins
Updated: Mar 12, 2022
There is only ONE MONTH to go before HM Revenue and Customs (HMRC) introduces a new tax check that must be completed when people renew their licences to drive taxis or drive and operate private hire vehicles in England and Wales.
The new check, which will be required from 4 April 2022, will not include any calculations. It simply confirms a driver is registered for tax on their licensed taxi or private hire vehicle income.
Designed to be quick and straightforward, the online process should only take a few minutes and will only be required every few years. It forms part of a much wider range of checks that licensees are already required to carry out.
You’ll need to complete the tax check when you renew your licence as a:
Driver of a taxi (hackney carriage)
Driver of a private hire vehicle (and dual licences)
Private hire vehicle operator
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HMRC has worked closely with sector representatives and licensing bodies to communicate the changes and to support those affected.
In January, HMRC published full guidance on GOV.UK to help licensees and licensing bodies prepare for the new tax checks that will be introduced in Schedule 33 of Finance Act 2021.
For anyone who has missed articles published in the trade press, on social media, at industry events, or on webinars and posts on GOV.UK, the guidance is the permanent resource to help prepare for the changes.
If you should have been registered to pay tax and have not been, HMRC will work with you to get you back on the right track. It’s your responsibility to get your tax right, but HMRC is there to help.
This is said to be about creating a level playing field for the compliant majority in these sectors, so the majority who do play by the rules won’t be disadvantaged by the minority who do not.
Getting a new licence: If you are applying for a licence for the first time, you will not need to complete the tax check. However, licensing bodies will direct you to HMRC guidance about your tax responsibilities and ask you to confirm that you are aware of this guidance.
Renewing a licence: From 4 April 2022, if you renew or apply for a subsequent licence under a different licensing body, you’ll have to do a tax check. You’ll be able to do this online through the new tax check digital service – when it goes live in early March.
Licensing bodies will send out clear guidance to licence holders ahead of their renewal date. HMRC has worked closely with licensing bodies, the taxi/private hire sector and their representative bodies to ensure they have the guidance and tools needed to prepare applicants for these changes, including materials translated into different languages.
How to complete the tax check:
You will be able to complete this tax check on GOV.UK using your Government Gateway account. You will only need to answer a few questions to tell HMRC how you pay any tax that may be due on income you earn from your licensed trade. If you do not already have a Government Gateway account, you can sign up on GOV.UK.
The tax check should only take a few minutes.
When you’ve completed the tax check, you’ll get a code. You must give this code to your licensing body. The licensing body cannot proceed with your licence application until the tax check is completed and they’ve received the code.
Your licensing body will only receive confirmation from HMRC that you’ve completed the tax check, they will not have access to your tax affairs.
What you need to do now to prepare for the check:
If you’ve not registered to pay tax on earnings from your licensed trade, please go to GOV.UK to check if you need to register as soon as possible.
If you’re an employee, find information on PAYE at www.gov.uk/income-tax/how-you-pay-income-tax
If you’re self-employed, find information on registering for Self Assessment at www.gov.uk/register-for-self-assessment
If you operate through a company, find information on Corporation Tax at www.gov.uk/corporation-tax
You can get help from HMRC via https://www.gov.uk/contact-hmrc which offers various ways to make contact. To discuss these changes via telephone, HMRC will be able to assist from 7 March 2022.
