Licensed drivers urged to meet new digital reporting duty

HMRC has issued a renewed reminder to licensed taxi and private hire drivers to submit their first Making Tax Digital for Income Tax (MTD IT) quarterly update by 7 August 2026, emphasising that drivers working under local authority licences are among those most likely to fall within the new reporting threshold.

The department says sole‑trader drivers earning over £50,000 from self‑employment must now provide a digital summary of income and expenses every quarter. For licensed taxi and private hire drivers, this typically includes fares, platform‑derived income, cash takings, tips, and allowable operating costs such as fuel, insurance, vehicle maintenance and licensing fees.

HMRC stresses that the update is short and can be submitted through recognised software, many of which offer simple tools tailored to small transport operators. More than 864,000 sole traders and landlords have already signed up, but HMRC notes that a significant number of licensed drivers have yet to file their first update.

Craig Ogilvie, HMRC’s Director of Making Tax Digital, said drivers already using digital tools for bookings, mileage or expenses should find the process straightforward, adding that early submission reduces the risk of errors or penalties.

The reminder follows ongoing compliance activity focused on the taxi and private hire sector. HMRC has been issuing letters to drivers working on hailing platforms such as Uber, Bolt and Freenow, asking them to review declared income after new digital platform reporting rules came into force in January 2024. These rules require operators to report annual earnings for each driver, enabling HMRC to cross‑check self‑assessment returns.

Licensed drivers are being advised to ensure that all income—whether paid directly by passengers, through operators, or via card terminals—has been correctly declared. HMRC has warned that discrepancies between platform data and tax returns may trigger further checks.