Thinking about registering for VAT? Read our independent FAQs for platform drivers

Private hire drivers already have a lot to deal with when it comes to tax. That can include potential compliance interventions linked to data being shared with HMRC, the new Making Tax Digital for income tax regime for reporting their taxes and questions about how employment status affects their tax position.

Now VAT seems to be another tax issue drivers may need to think about, especially in London. It is a complex tax, and it is easy to get caught out if you do not understand the rules.

That is why we have produced some independent VAT guidance for drivers. Our FAQs explain when VAT registration might matter, what it could mean in practice, and some common pitfalls to avoid. We have kept the format simple and practical, and published it as a standalone document so it can easily be shared with other drivers, including in WhatsApp groups.

The guidance is aimed at drivers, but it may also help people working through platforms in other sectors where we understand VAT registration is a current issue, such as Amazon Flex, Evri and other courier and delivery platforms.

Important note: 

There is still ongoing debate about drivers’ employment status for employment rights, but this guidance is based on drivers being self-employed for tax purposes.

A number of legal cases have looked at whether drivers labelled as self-employed are really self-employed, or whether they fall into the separate category of ‘worker’, which gives some basic employment rights. But ‘worker’ status only exists in employment law. It does not apply for tax.

For tax, there are only two possible statuses: self-employed or employed. If a driver works only as an employee, they cannot register for VAT on that employment income. At the moment, though, that is not the main focus of the current debate.

Employment status issues for platform work continue to evolve. If HMRC’s view of a driver’s tax status were ever to change, it could also affect their VAT position.