📋 The Golden Rule
HMRC allows deductions for expenses wholly and exclusively incurred for the purposes of your trade. Mixed-use expenses (business and personal) must be apportioned. Keep receipts and records for everything you claim.
1. Vehicle Running Costs
Your vehicle is your biggest expense — and your biggest deduction opportunity. You must choose between two methods:
Method A: HMRC Approved Mileage Allowance (Recommended for Most Drivers)
Claim 45p per mile for the first 10,000 business miles, then 25p per mile thereafter. This single rate covers fuel, insurance, depreciation, repairs, tyres, and road tax. No receipts needed for these individual costs — just your mileage log.
Method B: Actual Vehicle Costs
If you choose actual costs, you can claim the business-use proportion of:
- Fuel — petrol, diesel, or electricity (EV charging costs)
- Hire-and-reward insurance — the premium covering business use; if also used personally, claim the business percentage
- Repairs and servicing — oil changes, brake pads, timing belt, bodywork, MOT failure repairs
- MOT test fee
- Tyres
- Vehicle cleaning and valeting — essential for customer-facing work
- RAC / AA membership
- Road tax (Vehicle Excise Duty)
- Parking (business use only) — not parking fines, which are never deductible
- Congestion Charge / ULEZ — paid during business trips
- Toll charges — Dartford Crossing, QE2 bridge, ANPR tolls during work
- Car finance interest — if the vehicle is financed, the interest element of payments (not capital repayments) is claimable
2. Licensing and Regulatory Costs
All licensing costs directly related to your taxi or PHV operation are fully deductible:
- TfL private hire licence fee (London) or local council taxi/PHV licence fee
- PHV operator licence (if applicable)
- DBS (Disclosure and Barring Service) check fee — required at licensing renewal
- DVLA medical examination fee — if required by your licensing authority (Group 2 medical)
- Licensed plate (badge) fees and renewals
- Taxi meter calibration — if required by your local authority
3. Communication Costs
- Mobile phone — the business-use percentage of your monthly plan or SIM-only contract. If 100% business, claim 100%. If mixed, apportion fairly and document your reasoning.
- Data plan — apps, maps, and communication require data; this is part of your phone cost calculation above
- Radio or dispatch system subscription — if you pay a circuit or dispatch company a weekly/monthly fee for jobs
4. In-Vehicle Equipment
- Satellite navigation device (dedicated) — if not already in the car and purchased for business. If also used personally, apportion.
- Dashcam — used for business protection; typically 100% deductible
- Card payment terminal — credit/debit card readers (iZettle, SumUp, Zettle) and associated transaction fees
- Passenger screen or partition — if fitted for safety
- Air fresheners and hygiene supplies — keeping the vehicle presentable for passengers is a legitimate business cost
- First aid kit — if required by your licensing authority
- Fire extinguisher — if required or fitted for business
5. Professional and Administrative Costs
- Accountancy and bookkeeping fees — 100% deductible; reduces the after-tax cost of getting professional help
- Tax software subscriptions — QuickBooks, FreeAgent, TaxCalc
- Business banking fees — monthly charges on a dedicated business account
- Business insurance — employer's liability, public liability (if applicable)
- Trade association membership — relevant taxi driver organisations
- Professional driver training — wheelchair accessibility training, advanced driving courses directly related to your work
6. Platform Commission Fees
If you operate through Uber, Bolt, Free Now, or any other platform, the commission they deduct from your fares before paying you is a fully allowable expense. Always declare your gross fare income and deduct the commission separately. Your platform earnings statements will show both figures.
What You Cannot Claim
⚠ Non-Allowable Expenses
The following are not deductible: parking fines, speeding fines, or any penalty charge notices; meals and food while working locally (subsistence is only allowable on overnight business trips away from home); purely personal vehicle costs; clothing that could be worn outside of work (only specific uniforms/safety equipment qualifies); the personal-use portion of any mixed expense.
See the Tax Saving from Your Expenses
Enter your total annual expenses and mileage into our free calculator to see exactly how much they reduce your tax and NI bill.
Open Free Tax Calculator →Frequently Asked Questions
Can I claim for a vehicle I'm buying on hire purchase?
Under the actual costs method, you can claim capital allowances on the vehicle's cost (spreading the deduction over several years) plus the interest charges on the HP agreement. Under the AMAP method, vehicle purchase finance is irrelevant — the mileage rate covers all vehicle costs.
Can I claim for a uniform or high-vis vest with my company name on it?
Yes. Branded work clothing that cannot reasonably be worn outside work is an allowable expense. A simple polo shirt or high-vis vest with your business name or a platform logo qualifies. Generic office-style clothing does not.
I bought a new car specifically for taxi work. Can I deduct the full cost?
Under the actual costs method, you can claim capital allowances — either the Annual Investment Allowance (AIA) for the full amount in the first year if applicable, or the Writing Down Allowance (18% per year for most cars, 6% for high-emission vehicles). This is complex; consult an accountant for your first year. Under AMAP, the car purchase cost is covered within the mileage rate.