As an Uber driver in the UK, it’s essential to grasp the VAT implications related to your fares. Let’s break it down:

1. VAT Registration:
   • Threshold: If your annual turnover from all business activities exceeds £90,000, you must apply for VAT registration.
   • Voluntary Registration: Even if your turnover is below £90,000, you can voluntarily register for VAT.
   • Flat Rate Scheme: If your turnover is expected to be less than £150,000, consider applying for the Flat Rate Scheme
2. VAT on Earnings:
   • Uber charges VAT on the entire fare amount at the standard rate of 20%.
   • You collect VAT from selling your services (transportation) and remit it to HMRC with your VAT return.
3. Business Expenses and Input VAT:
   • You may also incur VAT on business expenses (e.g., fuel, repairs).
   • As a VAT-registered driver, you can potentially deduct input VAT, so keep copies of your VAT invoices/receipts.
4. Flat Rate Scheme (FRS):
   • Under FRS, you pay a fixed rate of VAT (10% of total turnover) to HMRC.
   • In the first VAT-registered year, you receive a 1% discount on this rate.

Remember, understanding VAT ensures compliance and helps manage your finances effectively.

For more details, please contact HUSA Accountants.