Worked example
Priya drives private hire in Leeds. In 2026/27 the app paid out £40,000 in fares, kept £8,000 in commission, and she spent £1,000 on her licence, phone and car cleaning. She drove 20,000 business miles, and the car cost £9,000 to run in total, with 80% of all its miles being for work.
| Step | Amount |
|---|---|
| Mileage rates: 10,000 × 45p + 10,000 × 25p | £7,000.00 |
| Actual costs: £9,000 × 80% | £7,200.00 |
| Profit with mileage: £40,000 − £8,000 − £1,000 − £7,000 | £24,000.00 |
| Tax + Class 4 on £24,000 (£2,286.00 + £685.80) | £2,971.80 |
| Profit with actual costs: £40,000 − £8,000 − £1,000 − £7,200 | £23,800.00 |
| Tax + Class 4 on £23,800 (£2,246.00 + £673.80) | £2,919.80 |
| Saving from actual costs | £52.00 |
The two methods are close for Priya, and actual costs win by £52. Either way she spends the same £9,000 on the car, so her cash after costs and tax is £19,080.20 with actual costs and £19,028.20 with mileage. Because she must keep using whichever method she picks for as long as she drives this car, she should weigh up next year too: a cheaper insurance renewal or fewer repairs could tip it towards mileage.
How it works, in plain English
Your tax as a self-employed driver is based on profit: what passengers or apps paid you, minus the costs of earning it. The vehicle is usually the biggest cost, and HMRC lets you deduct it in one of two ways.
Method 1: simplified mileage rates
You multiply your business miles by a fixed rate: 45p a mile for the first 10,000 miles in a car or van and 25p after that, 24p for a motorcycle and 20p for a bicycle. That single figure covers fuel, insurance, servicing, repairs, road tax and wear and tear, so you cannot claim any of those on top. You can still claim parking, tolls, congestion charges and things that are not about running the vehicle, like your licence or phone.
Method 2: actual costs
You add up everything the vehicle cost during the year and claim the business share. If 80% of your miles were for work, you claim 80% of the bills. The cost of buying the vehicle itself is handled separately through capital allowances, which this calculator does not include — if you bought a car recently, actual costs may be more generous than shown here.
Picking a method — and sticking with it
Mileage rates usually suit drivers with a modest, efficient car and high mileage. Actual costs often suit expensive vehicles, high insurance (common for taxi and private hire cover) or lots of repairs. Mileage rates can only be used for cars and vans if you have not already claimed capital allowances on that vehicle, and once you choose a method for a vehicle you must keep using it until you replace that vehicle. Run the figures before your first tax return with a new car.
Platform fees and gross earnings
Apps often show you a net payout. HMRC expects your turnover to be the gross fares, with the commission claimed as an expense — the profit ends up the same, but gross figures matter for Making Tax Digital and VAT thresholds. Most app dashboards give an annual tax summary showing both.
Frequently asked questions
Can Uber and delivery drivers claim 45p a mile?
Yes, if you are self-employed and drive a car or van, you can claim 45p for each of the first 10,000 business miles in the tax year and 25p after that — as long as you have not claimed capital allowances on the vehicle. The rate replaces fuel and running costs; you cannot claim both.
Which is better for a taxi: mileage or actual costs?
It depends on your vehicle and miles. Taxi and private hire insurance is expensive, so actual costs often come out ahead for licensed drivers, while delivery drivers in small cars doing lots of miles tend to do better with mileage rates. Put your own numbers into the calculator above to compare.
Do miles between jobs count as business miles?
Generally yes. Driving to collect a passenger, driving between drops and waiting or repositioning while logged on are part of the work. Your trip from home to the first job and back at the end of the day can be less clear-cut — keep a log and check HMRC guidance for your situation.
Can I switch from actual costs to mileage rates next year?
Not for the same vehicle. Once you have used a method for a particular car or van, you must stay with it until you stop using that vehicle for the business. You can choose again when you change vehicle.
Do I have to declare tips and bonuses?
Yes. Tips paid through the app, cash tips and incentive or quest bonuses are all part of your self-employed income and belong in your turnover.
Will the app report my earnings to HMRC?
Digital platforms now send HMRC details of the sellers and service providers who use them, including ride-hailing and delivery apps. That report is not a tax bill in itself, but HMRC can compare it with your tax return, so make sure your figures match your annual statements.
Estimates only, not tax advice. These figures are a guide based on the information you enter and the 2026/27 rules. Your own position can differ — check GOV.UK or an accountant before relying on them.
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