How to become an Uber driver
Uber is a platform that connects drivers with people needing a lift or people ordering food. The driver can pick you up and take you to a location or deliver food from a restaurant to your house.
The biggest name in the gig economy, Uber, means drivers earn as they pick up passengers. For many, driving for Uber is the perfect side hustle around studies, projects or other jobs, as you pick your hours and earn as much as you work.
Since Uber launched in the UK 10 years ago there are now around 70,000 drivers transporting people and food around urban areas. The hail-a-ride app is so popular that Uber celebrated the one billionth trip being taken in the UK at the end of last year (the lucky passenger won a decade’s worth of free rides which isn’t bad).
It hasn’t all been plain sailing for the company though, with a landmark case in early 2021, the Supreme Court ruled that Uber drivers were not independent contractors, but workers with statutory holiday, pensions and minimum wage.
This has changed the relationship between drivers and Uber and influenced things like how much they can earn. (And of course how much they pay in tax!)
How do I become an Uber driver?
There are some minimum requirements you’ll need to meet in order to become an Uber driver:
- A valid UK driver’s licence (EU ones need to be converted to UK)
- A private hire licence from your local council
- Proof of UK residency
- Proof of insurance on your car and private hire insurance
- A bank statement with your name and bank details for payment, or a business which you’re an owner of
Your car also needs to meet the Uber minimum standards, so it needs to have 4 doors, can hold a minimum of four passengers (so needs to be a 5 seater or above), and be in good condition.
Once you’ve uploaded all of this into the Uber portal, you’ll need to follow the online Edume course to familiarise yourself with the Uber app, and then visit one of their Greenlight hubs to get your profile picture taken and activate your account.
How much can I make as an Uber driver?
A result of Uber’s Supreme Court case is that as an Uber driver you’ll earn at least the national living wage, which is £9.50 per hour for the over 23s.
They’ll also pay you 12.5% of your earnings every 2 weeks as a form of holiday payment. Although on the flip side they also take 25% from each journey you make. It’s important to factor this while taking on trips as you’ll receive 75% of what you see.
After that, car leasing company Splend estimates drivers make anywhere between £250 and £800, pre vehicle costs and tax. With many drivers using rent-to-buy schemes or paying off the vehicle cost in instalments, you may also need to factor this in:
It’s also worth considering running costs such as fuel, which according to Energy Saving Trust UK is about £2-£10 per 100 miles for hybrids, depending on where you charge and what car you have. And for the average single combustion engine car, it’s about £13-£16 per 100 miles.
And for the 64% of Uber drivers who drive in London, there’s the ultra-low emission zone (ULEZ) and congestion charge zone in place to deal with the over congestion and poor air quality of central London. For plug-in hybrid and electric cars, there’s no charge. For cars with petrol engines it’s £12.50 per day for the ULEZ and £15 per day for the congestion.
Private hire insurance is also worth considering, as it costs a whopping average of £3,000 per year, which is about £60 a week.
So if you’re looking at being a full-time Uber driver in London:
- With a petrol car, your average take home each month after these costs would be about £1,863.
- If you’re a hybrid plug-in or full electric driver your average take home is £1,960.
And then it’s worth looking at how tax works.
How do I pay tax as an Uber driver?
Although classified as a worker rather than self-employed, you still need to complete a self-assessment tax return as Uber doesn’t pay you a monthly salary with PAYE.
What you pay to HMRC is your tax bill minus the expenses of running your Uber. You can read more on how to complete your self-assessment tax return in this Earnr article.
The usual cut off date to complete your self-assessment is the 31st of January if you’re doing it online, and 31st of October if you’re completing the form by post.
The tax bands for Uber drivers work in the same way as any other occupation:
- Tax allowance: 0% of earnings (You earned between £0 - £12,570)
- Basic rate: 20% of earnings (You earned between £12,571- £50,270)
- Higher rate: 40% of earnings (You earned between £50,271 - £150,000)
- Additional rate: 45% of earnings over £150,000
See what tax bands are and how they work.
What can I expense as an Uber driver?
The benefit is that, because there’re so many costs in running your car from petrol to congestion charges, there’s quite a lot you can claim in expenses. You can deduct these costs from your taxable profit as long as they’re eligible.
So if you earn £36,000 and you claim £9,000 in expenses, you’d only be taxed on £27,000 for the year which reduces the burden of tax on your income.
As an Uber driver you might expense things like:
- Car maintenance costs
- Charges on high congestion areas or motorways
- Private hire insurance
- Fuel
- Phone bill for using the Uber app and data
How can Earnr Help?
Earnr allows you to track your ingoings and outgoings over the course of the year, and automate your tax return. You mark each payment and each expense as you go so that by the time you get to doing your tax return, we’ll have everything we need to do the process for you.
