Do Uber drivers need to register for VAT?

Yes, if your total income exceeds £90,000 in a 12-month period, you must register for VAT with HM Revenue & Customs. If you are below this, registration is optional.

Do Uber drivers in London get VAT on top of their income?

Yes. Since 2026, Uber adds 20% VAT on top of fares in London. If you are VAT registered, you receive this VAT as part of your income.

Do Uber drivers outside London need to charge VAT?

Usually no. Outside London, Uber acts as an agent, so VAT is not added to fares unless you exceed the VAT threshold.

What is the Flat Rate Scheme?

The Flat Rate Scheme allows you to charge 20% VAT but only pay a fixed percentage (usually around 10%) to HM Revenue & Customs. You keep the difference.

How much can I save with the Flat Rate Scheme?

For example, if you earn £50,000 and receive £10,000 VAT, you may only pay £6,000 to HMRC and keep £4,000. In your first year, you could keep up to £4,600.

What is a limited cost trader?

If you spend very little on goods, you may be classed as a limited cost trader. This increases your VAT rate to 16.5%, reducing the benefit of the scheme.

Can I claim VAT on expenses?

Yes, under the standard VAT scheme you can claim VAT on fuel, repairs, phone bills, and accounting fees. Under the Flat Rate Scheme, you usually cannot claim VAT back.

Is VAT registration worth it for Uber drivers?

For many London drivers, yes. Because VAT is added on top of fares, it can increase your income if set up correctly.

How often do I need to submit VAT returns?

VAT returns are usually submitted every 3 months, and you must keep digital records.

What happens if I don't register for VAT on time?

You may face penalties, interest, and have to pay backdated VAT to HM Revenue & Customs.

Can I register for VAT voluntarily?

Yes. Some drivers register early to benefit from the Flat Rate Scheme or to reclaim VAT.

Does Uber manage VAT for drivers?

No. You are self-employed and responsible for your own VAT and taxes.

Updated 2026

VAT for Uber Drivers in London

2026 Guide

April 2026 8 min read Uber Drivers, VAT

Earn More by Getting Your VAT Right

If you're an Uber driver in London, the 2026 VAT changes have created a huge opportunity.

Most drivers don't realise this yet—but if you're registered for VAT and set up correctly, you could be earning £4,000–£5,000 extra per year.

Toyota Prius hybrid car - typical private hire vehicle in London

Toyota Prius & Hyundai Ioniq – The new face of London private hire

If you're new to managing your taxes, see our dedicated guide for Uber drivers:

Uber Drivers Guide

What Changed for London Uber Drivers?

From January 2026:

Toyota Prius hybrid - the most common private hire vehicle in London

Private hire vehicles like the Toyota Prius now receive VAT on every fare

1
Uber now acts as the supplier of the ride in London
2
20% VAT is added on top of every fare
3
Passengers pay the VAT—not you

This change applies to drivers licensed by Transport for London.

The key takeaway:

You are now receiving VAT on top of your income

Real Example: £50,000 Uber Driver in London

Business professional using phone and laptop - representing Uber drivers managing their business

VAT registration could earn you £4,000–£5,000 extra per year!

Let's break it down:

Uber earnings

£50,000

VAT added (20%)

£10,000

Total received

£60,000

VAT Registered + Flat Rate Scheme

You pay 10% to HMRC

£6,000

You keep extra

£4,000

First-Year Bonus

New VAT registrations get a reduced rate in year one:

Flat rate drops to

9%

You pay

£5,400

You keep

£4,600

Why VAT Registration Can Increase Your Income

For London Uber drivers, VAT is no longer just a tax—it's a strategy.

Earn Thousands Extra

Potentially £4,000–£5,000 more per year in your pocket

Simple Calculations

Flat Rate Scheme makes VAT straightforward

Better Cash Flow

Manage your finances more effectively

More Control

Take charge of your business finances

Important: This Doesn't Work for Everyone

To benefit, you must:

Not be a limited cost trader
Have the right VAT setup
Stay within Flat Rate Scheme rules

If done incorrectly, you could lose the benefit entirely

London vs Outside London – Key Difference

London (TfL Drivers)

VAT added on top of fares
Big opportunity to profit
You receive the VAT

Potential Extra Income

£4,000–£5,000/year

Outside London

Uber acts as an agent
VAT usually not added
Unless threshold exceeded

VAT Impact

Different rules apply

Should You Register for VAT?

You should seriously consider it if:

You're driving in London
Your income is £30,000+
You want to increase your earnings
You're planning to drive long-term

Don't Get This Wrong – HMRC Is Targeting Drivers

Many drivers are unaware that HM Revenue & Customs is actively targeting Uber and Bolt drivers for undeclared income.

Read Our Full Guide

This explains:

How HMRC is identifying drivers
What happens if you haven't declared income
How to fix issues before penalties increase

Our Services

How We Help Uber Drivers

At Taxwise Accountancy, we specialise in Uber drivers and private hire businesses.

Professional accountant working on financial documents representing expert tax services

Expert accountants helping Uber drivers maximise their income since 2010

Register for VAT

Correctly set up your VAT registration

Flat Rate Setup

Set up the Flat Rate Scheme properly

Avoid Pitfalls

Avoid limited cost trader issues

Maximise Income

Get the most from your VAT strategy

Stay Compliant

Stay fully compliant with HM Revenue & Customs

Learn more about our services

FAQ

Frequently Asked Questions

Everything you need to know about VAT for Uber drivers

Simple, Affordable Pricing

from £60

per month

Fixed

No surprises

Ongoing support

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Don't miss out on thousands of pounds in extra income.

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Tailored to Uber drivers

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Find out if VAT registration is right for you