The best time to work is when you’re young and single, once you’re married with kids you could no longer do the long hours, the older you get the harder it gets to do long hours, and the older you get the more you realise health is your biggest wealth
I know a married and middle aged accountant that works 12 hours per day with two children. It kind of has to be a sacrifice to health. But he likes the fact he can't discuss what he watched on tv. I think you you work it in two ways do it young retire early or sacrifice it younger and go back out there. Works both ways
@@exex9378 arguably no job sitting down is a healthy job. The majority of us sit down for a living. Most Jobs we do are not particularly healthy. Working out at least balances the books.
Tom, if your earnings exceed the threshold for VAT, you’ll be able to reclaim VAT on your expenses - fuel, some running costs and the vat you pay on your LEVC. It would probably somewhere near balance out but needs a LOT more accounting and bookkeeping records.
The VAT is an interesting point, Tom. Here in Australia, we have our Good & Services Tax (GST) equivalent. GST is factored into our metered rate, in our cabs, and therefore, when the GST scheme was implemented 20 years ago, cab drivers are now required to pay GST on every dollar we earn.
@@Caroleonus GST is always included in the price. It's also always 10% on all items and services. Businesses have to collect GST to send to the gov during tax season. I'm happy that's it always included in the price. I'd go insane in the US since they never have tax in advertising (frankly, it's just a reason to lie to people about the actual price)
Just out of curiosity if you earn under Australia's GST threshold (I think it's 75k?) does that just mean you get to keep that extra revenue? Or is it paid regardless unlike other businesses?
The great thing about being a london taxi driver is that you have the ability to earn money if needs require. You can basically call in your own overtime! Need more money-Work more hours. Great vid Tom 🚕
As a driving instructor, a similar answer applies to my job. There are many variables although unsurprisingly the national driving schools always give absurd figures in their adverts that pretty much nobody achieves. Usually they provide a turnover figure rather than profit but aren't transparent about it and/or they will assume a ridiculous number of lesson hours a week. 40 hours a week sounds reasonable for a full time job but 40 hours a week of lessons can easily become 55+ hours due to travelling to and from lessons, admin, diary management, washing the car etc. Personally I rarely do more than 25 hours otherwise I'd go insane and I'll be changing my job in the summer because I'm fed up of teaching people to drive and sitting in a car for hours each day, among other reasons.
Tom! You have inspire me to open my own channel , I've been a cab driver for about 4 years now in my hometown about hour away from NYC and we got a good taxi system out here. If you have any tips, would surely appreciate it. Blessing my man and stay safe on the road in London!
Very interesting and if, for example one driver lives in Chiswick he can put his light on as soon as he gets in. Whereas another driver who lives out of town may have to drive for an hour before he can start picking up fares.
I left the trade in March 2020 (covid)...never went back. After 23 years it was the best thing to happen to me. I've got my life back. My blood pressure is normal now and my stress levels are manageable. Wait till you settle down, maybe have kids, you become a slave to the meter. That's my take for what it's worth.
But surely the freedom to work whenever you want. Is great. Isn’t it ? Wouldn’t that be ideal to someone who has kids. When you say a slave to the meter. Do you mean. You would have to work a certain amount of hours to cover the cost of the cab first before you start earning ?
Some people find the job more stressful than others - if his youtube channel keeps growing at this rate he won't take to work behind the meter as much as others do, which could strike a nice balance for him! Who knows.
So, in essence, the VAT liability threshold makes it so that being a taxi owner-driver isn't about maximizing your turnover, but about minimizing your costs. For example, 60k of costs on a turnover of 85k leaves a much smaller profit than 30k of costs.
The answer is where you talk about the decorator, who adds the 20% VAT. As a tour guide, if a 50% of your income comes from pre booked tours, you add there the 20% VAT that you can claim back later. This helps you to pay a 10/9% difference instead of a 15% (20%-5% VAT for your energy expenses).
Interesting stuff Tom, especially with how you guys have to deal with the VAT, seems bizarre to me that they would just dump a massive load of tax after you cross the £85k threshold, surely it would make more sense to do it gradually, that way the government would actually earn more of this tax from taxis as people wouldn't mind as much going over the 85k limit?
Рік тому+3
Right? There’s a class of workers purposefully not earning what they could and therefore limiting the amount of income tax they’re paying. For certain types of self employed people VAT would work so much better as a progressive tax
It's more designed to work for larger companies who are working with/purchasing from other companies also being required to collect VAT. The way it's supposed to work is that any VAT you incur from buying supplies from other companies you offset against the VAT you charge to customers and you only set aside and pay the difference to HMRC. With most businesses that are VAT registered, assuming they charge VAT and make VAT charged purchases, all that happens is they collect the VAT on HMRC's behalf on sales they make (which they'll tack 20% or whatever the applicable rate of tax is for that service) on top and pay that and instead of recording an extra 20% in expenses to deduct off their earnings when they buy a supply that has had VAT applied, that 20% deduction just comes on the tax they pay instead and actually makes next to no difference. It's an unfortunate position for Tom and other small businesses that might not get the benefits of buying from other suppliers who charge VAT but cannot charge the extra VAT to customers themselves but are required to collect it and thus take less effective income for themselves.
Sort of like the gold rush. It was the people selling the axes and shovels and Levi’s who made bank. NHS is similar. So many companies are propped up by the work they do for the health service.
Why is it disrespectful to share your income? Doesn't it help everyone learn more about the trade and understand how well they're doing or how they could improve?
@@EuanBCFC Or it could help those being underpaid to realise that they’re being exploited. The stigma around discussing pay is directly opposed to the interests of workers.
I used to be a passenger boat skipper, pay was poor but occasionally we got a decent tip. Once I got £50 for a job which was close to what I earned for a whole shift. Tips vary but if you get someone rich that likes your service, of course you’ll earn more that day. Hard to calculate as you say.
Tom one thing to clarify is that you aren't taxed VAT on income you earned before registering. So if you hit the threshold (£85,001) you would have to register, but you would not need to pay VAT on those earnings - it would be all earnings from that point. Your point still very much stands though, as if you earned a similar amount over the following 12 month period, you would pay full VAT on those earnings. Without a way to charge it through the meter, you're right - it's a completely unfair system.
This has probably been pointed out in other videos, but I really think this style of presenting would suit a segment on say, The One Show. Informative, concise, good, confident presenting style, genuinely interesting content that could be condensed into a 5 minute film. You could pick any number of topics you've done a UA-cam video on that is to do with cabbies and help dispel some myths around the profession, bring it into the public eye a bit more, and your presenting style is perfect for it. It could even be a recurring segment on London itself!
Technically speaking VAT is not a TAX on you. But the customer. You can claim back VAT on your expenses. You’ll need a good accountant for that, most aren’t.
I used to play badminton with a retired cab driver and he once said he hated taking payments by card or check because it had to go through the bank and tax man. But cash could be hidden. My late wife also worked with a part time cabbie and she was told the same thing.
The VAT is misrepresented in this video. I will round both (slightly less/more then the 85000) to 85000 to keep it simple. -> 85000 turnover with an arbitrary 35000 expenses. Without VAT: 85000 turnover - 35000 expenses = 50000 profit With VAT: (1 - 20% VAT) * (85000 turnover - 35000 expenses) = 0.8 * 50000 = 40000 profit That (and added burocracy) is why you need to earn way past the the VAT limit to earn more profit then without VAT. Of cause at that profit there still must be paid income tax.
That's not quite a complete explanation. Once you pay output VAT, then you can also claim (recover) input VAT on your purchases too. That's not insignificant.
Cash work has gone its all Apps and credit cards you can't show peanuts anymore HMRC have a special unit looking into low turnover. Last thing you need is an investigation and a 10k tax bill.
If you are VAT rated you get the VAT back on everything you buy, fuel, vehicle, parts for maintenance, phone bill, house bills if business related. laptop, etc etc etc
im a taxi cab owner and operator in island of hawaii,maui and i charge $100 per hour for island tours and can be done by 3-10 hours regardless by what they want to see on the island like volcanos ,black and red sand beach national parks, waterfalls, turtle beaches, lava fields, whale whatching, rain forest, or a rare sights of billy goats on the mountains
You can reclaim the VAT on purchases for your business. So a lot of people like this won't actually end up losing the VAT amount. Especially if they need a new camera!
There's a more tax efficient model I'm seeing people use in the hire and reward trade for VAT. I'd speak to an accountant about it, but I use a model that's perfectly legal and my VAT isn't 20% on the big turnover, but instead a smaller more practical figure - but in your case it might 'only' apply to the meter, so other kind of jobs wouldn't work under it.
5 years ago before I retired I couldn’t get nowhere near £200 . I was lucky to get £100. Ranks full, nothing on the street. Uber everywhere. Have things got that good since I retired. I think I better ask for my badge back 😂
I have been a cabbie a few years now , I only do 40 hours a week cos of my life outside. Was single the first half of those 3 years and in a relationship the second half . Anyhow my social life and seeing the gf is always at the weekends, so I just work in the week. Still make a decent living most weeks just doing those hours . Haven't really worked a weekend for last 2 years as my weekends are always stacked , starting from Friday Evenings till Sunday night
I’m 17 and want to do the knowledge and have my badge by 20. Every cabbie never wants to say their annual figure. Can you tell me yours? Just to know what I’m getting myself into
@@JoshuaHall72 Just wanted to say that , if you get your badge at 20 you wouldn't be allowed to drive a cab till your 21. However 3 years is the absolute minimum to do the knowledge these days , could take longer may as well start now
That VAT threshold is strangely high. In most countries the rate is set so that someone doing a small part-time "side job" doesn't need to register, but anyone working full-time would fall in-scope. I know sales taxes are quite different, but here in the US the basic rule is that if you make a taxable sale you must register. Period. That said, under a VAT system, you get input credit. If you fall under the registration threshold, you pay VAT on all of your expenses. If you cross it, you can take a credit for any VAT paid on fuel, the vehicle, insurance, etc. This is why the flat VAT scheme for taxis is 10%, because it assumes that on average half the VAT would be credited back if you itemized all the receipts.
Would being VAT-registered mean though that you could claim back all the VAT from the petrol? Should be quite an amount no :) & is there VAT on charging electric? Not sure haha
Theoretically he could, however for most forms of energy VAT is only 5% not 20% that he'd have to collect so it doesn't really help to offset that much. Also, even if he could do that, because he can't charge the extra 20% VAT to the customer, that is still coming out of earnings and effectively reducing his hourly rate compared to someone earning less than £85k. At that point as a sole trader, I think I'd probably choose to work less hours for more hourly pay and still have a comfortable living - like Tom said I think quality of life becomes the deciding factor not the money
The media are good at making false wage statements online. Just like a few years ago with the HGV driver shortage was on. Daily mail saying average wage was £70 k per year. Not accurate. Most standard drivers don’t earn that kind of money, for for doing average hours.
At start of video when you say people say u should be a bus driver or hgv driver it’s not all bout money but enjoyment and also the situation ie flexibility as you ur own boss and can choose your own shift pattens and times hours to work
Wow, Tom. Very well explained I'm so impressed with your intelligence and research 👏 love the videos... I think we need a video on drivers' etiquette as it's going down the pan.
But... how much are you earning? Haha all good if you don't want to say. But this was super interesting regardless, and doesn't have a clickbait title, so nice work!
Self employed van courier here... Great video as usual buddy. Long time lurker on your channel and a lot of your issues are the same as mine with regards to limitations on earnings. Just a bit more of a layman's explanation of VAT registration for people... Being VAT registered can be advantagous when being a sole trader or running a business but it depends on who your customers are... it wouldn't really work for Tom as if he were VAT registered it would mean he would have to charge VAT on all of his fares which, because the average punter who uses him couldn't claim the VAT back, would make him less competitive with pricing and therefore potentially loose him custom. The work I do on the other hand is all business to business meaning that it is advantagous for me to be VAT registered as it is likely that the companies I'm working for are too. Meaning that when I charge them VAT, they're able to claim it back and so on and so forth for their customers. You can also claim a percentage of the VAT back on your expenses too (and in transport most of your expenses have VAT). Meaning you can claim VAT back on fuel, vehicle purchases, tyres etc... I'm on the flat rate scheme which means that I can claim (for my first year anyway) roughly 11% back on all the VAT purchases I have. Also just for reference you can register to charge VAT if your turnover is less than £85k, it just becomes mandatory if it is more. Great video pal, keep them up.
Love the videos Tom A point though, on your comparison between Dinosaur Dave and Butter boy Ben, you made no provision for depreciation. This would close the gap between them.
This is true. There's a lot of ways to skin the cat. Drivers who rent for example. or drivers who live in town so can claim 100% of their vehicle and fuel, vs the commuting driver 😊
VAT is just ridiculous you should be able to work and earn as much as you want and not have to worry about earning too much money that you lose money from your net income. Cab drivers need to starts talking to their local MPs to get this legislation changed or at least to give them a tax exemption or you pay VAT. Also idk how being a cab driver is classed as your own business when you work under the TFL umbrella. Its not like if you were a painter and decorator where you get to make your own rules for your company and how you do your job its not like there are regulation on how you have to paint a wall or what you can charge. Being forced to work at a set rate doesn't sound like its completely your own business.
Income Tax and VAT! There is no insensitive or ever as been for the ordinary person to try and better themselves because of it, simple is simple as, always as always is, in one hand out the other,...............
The taxi drivers outside Heathrow charging anything they want ..its a disgrace they are getting away with too...they need to be regulated and very tightly.....
Yes, providing they were limited companies, i.e. incorporated companies registered with Company's House. That was, each of those companies is a separate legal person. If instead you were a sole proprietor, then the legal person is YOU, so you couldn't, say, claim to have two separate businesses and each was under the VAT threshold. That would be diagregation - artificially trying to split up something you can't - and the VATman would rub his hands with glee and go after you. VAT has existed in the UK for 50 years, so all sorts of tax avoidance schemes, fraud etc. has played out and there's lots of case law/legal precedents, in other words, it's all been seen and done. Actually, nearly all VAT is collected by BT, Tesco, British Gas etc. from their customers/consumers. Small builders, plumbers, or taxi drivers, even if they are VAT- registered, pay relatively nothing in comparison into the VAT pot, but the same rules must apply to them as BT, Tesco etc. Also, Tom glossed over that VAT-registered busineses can reclaim VAT they are charged, e.g. on fuel, goods/services etc., so they get that 20% VAT back. It's not simply £85,001 turnover = £17K VAT due.
@@TomtheTaxiDriver thanks for replying. I find it mad that once 85k it hit turnover-wise,VAT is liable. ridiculous! would've thought profit-only and then at least expenses can count against it
Really Vat need to be changed so everyone pays it say above £1000 (which is the untaxed hobby earning) It’s actually stopping people growing there business And it’s so easy to do these days either app based accounting systems
This is actually how it works in the Netherlands, and I think most European countries. There 21% VAT is applied on every euro earned in a professional context, starting at €0. For hobby purposes the first €1000 is VAT free, but professional transactions do not enjoy this exemption. Seems a bit weird that the UK has a 85,000 pound VAT exemption really.
These older drivers putting younger people off the trade do my nut in! See one tell a kid on the knowledge to give it up. Must want us to move aside and just give the work to Uber! Divs. I’ve been doing it 9 years and never been busier!
Interesting point re the VAT that I didn't think of. Fortunately with my business I can add it onto our invoices. I wonder if there's a way that TFL could allow foreign tourists or visitors to travel VAT free, and then you can reclaim remaining VAT on fuel and expenses.
2 Hours Heathrow wait would you not use that as your brake and time to do ur finances books or the likes. Maybe if your studying use it as study times book holidays or the little jobs you you never get around to aka usingthe time wisely
Am I being daft here? If the driver is VAT registered doesn't it mean they add vat to the cost of the journey, so the customer ends up paying the VAT. I thought the whole idea of VAT is that the customer always pays, while the supply chain pay one another so none lose out?
Only is the company (sole trader) terns over £85k a year There are some benefits, you can them claim back vat off costs. To cab, fuel, card payments, maintenance. I bet it’s worth changing vat if you can turn off £75k
If your payed cash no one knows how much you earn. Card payments are a different matter. Cash can be squirrelled away. I wonder how many cab drivers declare card payments because they’re into your bank and I wonder how many declare half the amount of cash payments they take. If I was in the same position, I would do exactly the same fuck the taxman. 😅😅
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Err you know your income from product placement counts towards a VAT threshold.😢🤪
The best time to work is when you’re young and single, once you’re married with kids you could no longer do the long hours, the older you get the harder it gets to do long hours, and the older you get the more you realise health is your biggest wealth
Spot on that comment, it’s definitely not a healthy job.
I know a married and middle aged accountant that works 12 hours per day with two children. It kind of has to be a sacrifice to health. But he likes the fact he can't discuss what he watched on tv. I think you you work it in two ways do it young retire early or sacrifice it younger and go back out there. Works both ways
@@exex9378 arguably no job sitting down is a healthy job. The majority of us sit down for a living. Most Jobs we do are not particularly healthy. Working out at least balances the books.
I can’t live with my partner with a 1 and 3 year old because of this job I need my sleep and work weird hours 😢
This is very true
Tom, if your earnings exceed the threshold for VAT, you’ll be able to reclaim VAT on your expenses - fuel, some running costs and the vat you pay on your LEVC. It would probably somewhere near balance out but needs a LOT more accounting and bookkeeping records.
The VAT is an interesting point, Tom.
Here in Australia, we have our Good & Services Tax (GST) equivalent.
GST is factored into our metered rate, in our cabs, and therefore, when the GST scheme was implemented 20 years ago, cab drivers are now required to pay GST on every dollar we earn.
That's a bit cheeky from the taxman, if GST has the same "threshhold" concept
@@Caroleonus GST is always included in the price. It's also always 10% on all items and services. Businesses have to collect GST to send to the gov during tax season. I'm happy that's it always included in the price. I'd go insane in the US since they never have tax in advertising (frankly, it's just a reason to lie to people about the actual price)
@@Caroleonus Either the customer is paying it for you or you earn under the threshold in which case, happy days. it's a win win.
Just out of curiosity if you earn under Australia's GST threshold (I think it's 75k?) does that just mean you get to keep that extra revenue? Or is it paid regardless unlike other businesses?
Some real gems there! Never managed to get into the VAT territory in 25 years behind the wheel, but now I'm kind of glad I didn't. 👏🏾👏🏾
The great thing about being a london taxi driver is that you have the ability to earn money if needs require. You can basically call in your own overtime! Need more money-Work more hours. Great vid Tom 🚕
As a driving instructor, a similar answer applies to my job. There are many variables although unsurprisingly the national driving schools always give absurd figures in their adverts that pretty much nobody achieves. Usually they provide a turnover figure rather than profit but aren't transparent about it and/or they will assume a ridiculous number of lesson hours a week. 40 hours a week sounds reasonable for a full time job but 40 hours a week of lessons can easily become 55+ hours due to travelling to and from lessons, admin, diary management, washing the car etc.
Personally I rarely do more than 25 hours otherwise I'd go insane and I'll be changing my job in the summer because I'm fed up of teaching people to drive and sitting in a car for hours each day, among other reasons.
But to give a vague idea of what I earn, my franchise fee is £250 a week, fuel is about £70 a week and I charge £32 per hour for lessons.
Thank you for your honest message
Tom! You have inspire me to open my own channel , I've been a cab driver for about 4 years now in my hometown about hour away from NYC and we got a good taxi system out here. If you have any tips, would surely appreciate it. Blessing my man and stay safe on the road in London!
Just start and refine it over time 😊 Would love to visit Westchester one day!
@@TomtheTaxiDriver Thank you! You would surely love it!
Which town are you in if you don't mind answering? Hello from Québec 🙂
I never thought watching a fella talk about driving a cab would be so interesting. It’s like Clarkson’s Farm but for London Cabbies!
I guess being a cabbie, you can pick and chose your hours. It’s swings and roundabouts with your earnings.
Very interesting and if, for example one driver lives in Chiswick he can put his light on as soon as he gets in. Whereas another driver who lives out of town may have to drive for an hour before he can start picking up fares.
I never knew that about VAT. I honestly thought it was anything above 85k is taxed at 20%. That's insane...
I left the trade in March 2020 (covid)...never went back. After 23 years it was the best thing to happen to me.
I've got my life back.
My blood pressure is normal now and my stress levels are manageable.
Wait till you settle down, maybe have kids, you become a slave to the meter.
That's my take for what it's worth.
Not everyone wants kids mate. We're you a London cabbie?
@@TheL184 Yes, green badge.
But surely the freedom to work whenever you want. Is great. Isn’t it ? Wouldn’t that be ideal to someone who has kids. When you say a slave to the meter. Do you mean. You would have to work a certain amount of hours to cover the cost of the cab first before you start earning ?
Some people find the job more stressful than others - if his youtube channel keeps growing at this rate he won't take to work behind the meter as much as others do, which could strike a nice balance for him! Who knows.
So, in essence, the VAT liability threshold makes it so that being a taxi owner-driver isn't about maximizing your turnover, but about minimizing your costs. For example, 60k of costs on a turnover of 85k leaves a much smaller profit than 30k of costs.
Im a cabbie and earn just under a taxable income. Thank you very much Mr Tax man.
The answer is where you talk about the decorator, who adds the 20% VAT. As a tour guide, if a 50% of your income comes from pre booked tours, you add there the 20% VAT that you can claim back later. This helps you to pay a 10/9% difference instead of a 15% (20%-5% VAT for your energy expenses).
Interesting stuff Tom, especially with how you guys have to deal with the VAT, seems bizarre to me that they would just dump a massive load of tax after you cross the £85k threshold, surely it would make more sense to do it gradually, that way the government would actually earn more of this tax from taxis as people wouldn't mind as much going over the 85k limit?
Right? There’s a class of workers purposefully not earning what they could and therefore limiting the amount of income tax they’re paying. For certain types of self employed people VAT would work so much better as a progressive tax
It's more designed to work for larger companies who are working with/purchasing from other companies also being required to collect VAT. The way it's supposed to work is that any VAT you incur from buying supplies from other companies you offset against the VAT you charge to customers and you only set aside and pay the difference to HMRC. With most businesses that are VAT registered, assuming they charge VAT and make VAT charged purchases, all that happens is they collect the VAT on HMRC's behalf on sales they make (which they'll tack 20% or whatever the applicable rate of tax is for that service) on top and pay that and instead of recording an extra 20% in expenses to deduct off their earnings when they buy a supply that has had VAT applied, that 20% deduction just comes on the tax they pay instead and actually makes next to no difference. It's an unfortunate position for Tom and other small businesses that might not get the benefits of buying from other suppliers who charge VAT but cannot charge the extra VAT to customers themselves but are required to collect it and thus take less effective income for themselves.
Earn a lot yes but expenses are crippling. There’s many people very well off in the taxi trade and none of them are driving cabs. 😊
how do you mean? selling the cabs?
Sort of like the gold rush. It was the people selling the axes and shovels and Levi’s who made bank.
NHS is similar. So many companies are propped up by the work they do for the health service.
Why is it disrespectful to share your income? Doesn't it help everyone learn more about the trade and understand how well they're doing or how they could improve?
I guess because they all earn different amounts, one doing fairly well and sharing it could be seen as showing off to those not doing so well
@@EuanBCFC Or it could help those being underpaid to realise that they’re being exploited. The stigma around discussing pay is directly opposed to the interests of workers.
People need to be more open with their earnings. The only person who loses out is the employee when we don’t share earning info
It's pathetic mate that's what it is
@@zackaplowitz Not everything is a conspiracy
I used to be a passenger boat skipper, pay was poor but occasionally we got a decent tip. Once I got £50 for a job which was close to what I earned for a whole shift. Tips vary but if you get someone rich that likes your service, of course you’ll earn more that day. Hard to calculate as you say.
Tom one thing to clarify is that you aren't taxed VAT on income you earned before registering. So if you hit the threshold (£85,001) you would have to register, but you would not need to pay VAT on those earnings - it would be all earnings from that point. Your point still very much stands though, as if you earned a similar amount over the following 12 month period, you would pay full VAT on those earnings. Without a way to charge it through the meter, you're right - it's a completely unfair system.
Thanks Jay 😊
Another great video Tom!
This has probably been pointed out in other videos, but I really think this style of presenting would suit a segment on say, The One Show. Informative, concise, good, confident presenting style, genuinely interesting content that could be condensed into a 5 minute film.
You could pick any number of topics you've done a UA-cam video on that is to do with cabbies and help dispel some myths around the profession, bring it into the public eye a bit more, and your presenting style is perfect for it. It could even be a recurring segment on London itself!
That's the aims of the channel, to dispel the myths of London taxis and keep this glorious trade alive!
Got a bit of tax/VAT education from you there Tom! Thanks very much!
lol “I don’t care who knows how much I earn but I’m not telling you out of respect for other drivers” hahaha that’s so gracious for you 😂
Well done on your setup mate. Its nice to see your diverse income sources.
Technically speaking VAT is not a TAX on you. But the customer. You can claim back VAT on your expenses. You’ll need a good accountant for that, most aren’t.
But as a cabbie you can't charge VAT on the meter. Unlike say a plumber who could add it to their invoice.
I used to play badminton with a retired cab driver and he once said he hated taking payments by card or check because it had to go through the bank and tax man. But cash could be hidden. My late wife also worked with a part time cabbie and she was told the same thing.
Really interesting video Tom - love your content!
The VAT is misrepresented in this video. I will round both (slightly less/more then the 85000) to 85000 to keep it simple. -> 85000 turnover with an arbitrary 35000 expenses.
Without VAT: 85000 turnover - 35000 expenses = 50000 profit
With VAT: (1 - 20% VAT) * (85000 turnover - 35000 expenses) = 0.8 * 50000 = 40000 profit
That (and added burocracy) is why you need to earn way past the the VAT limit to earn more profit then without VAT. Of cause at that profit there still must be paid income tax.
Thank You Tom.
Good Luck to You.
Hi Tom keep it up 😁 you are a superstar London taxi driver well done Ali Walsall west midlands england
That's not quite a complete explanation. Once you pay output VAT, then you can also claim (recover) input VAT on your purchases too. That's not insignificant.
Cash work has gone its all Apps and credit cards you can't show peanuts anymore HMRC have a special unit looking into low turnover. Last thing you need is an investigation and a 10k tax bill.
Very interesting video, Tom, thank you👍
If you are VAT rated you get the VAT back on everything you buy, fuel, vehicle, parts for maintenance, phone bill, house bills if business related. laptop, etc etc etc
Still not worth it
im a taxi cab owner and operator in island of hawaii,maui and i charge $100 per hour for island tours and can be done by 3-10 hours regardless by what they want to see on the island like volcanos ,black and red sand beach national parks, waterfalls, turtle beaches, lava fields, whale whatching, rain forest, or a rare sights of billy goats on the mountains
as a aspiring ride hailing driver i find this informative and helpful. Gives some indication for comparative purposes. thanks
You can reclaim the VAT on purchases for your business. So a lot of people like this won't actually end up losing the VAT amount. Especially if they need a new camera!
Very insightful video must admit 👍
I heard all cab drivers have a yearly gross profit of £12570, is that true?
There's a more tax efficient model I'm seeing people use in the hire and reward trade for VAT. I'd speak to an accountant about it, but I use a model that's perfectly legal and my VAT isn't 20% on the big turnover, but instead a smaller more practical figure - but in your case it might 'only' apply to the meter, so other kind of jobs wouldn't work under it.
very interesting point on the VAT!
5 years ago before I retired I couldn’t get nowhere near £200 . I was lucky to get £100. Ranks full, nothing on the street. Uber everywhere. Have things got that good since I retired. I think I better ask for my badge back 😂
Great video Tom thanks
Friend of mine is a tube driver and is on 60k thought might be a random bit of useful knowledge
I have been a cabbie a few years now , I only do 40 hours a week cos of my life outside. Was single the first half of those 3 years and in a relationship the second half . Anyhow my social life and seeing the gf is always at the weekends, so I just work in the week. Still make a decent living most weeks just doing those hours . Haven't really worked a weekend for last 2 years as my weekends are always stacked , starting from Friday Evenings till Sunday night
Sounds quite similar to mine Lloydee, weekends are a rarity for me to work!
I’m 17 and want to do the knowledge and have my badge by 20. Every cabbie never wants to say their annual figure. Can you tell me yours? Just to know what I’m getting myself into
@@JoshuaHall72 Just wanted to say that , if you get your badge at 20 you wouldn't be allowed to drive a cab till your 21. However 3 years is the absolute minimum to do the knowledge these days , could take longer may as well start now
Yeah I’m going to buy myself a scooter and complete the blue books. Still, can you tell me your yearly annual figure?
That VAT threshold is strangely high. In most countries the rate is set so that someone doing a small part-time "side job" doesn't need to register, but anyone working full-time would fall in-scope. I know sales taxes are quite different, but here in the US the basic rule is that if you make a taxable sale you must register. Period. That said, under a VAT system, you get input credit. If you fall under the registration threshold, you pay VAT on all of your expenses. If you cross it, you can take a credit for any VAT paid on fuel, the vehicle, insurance, etc. This is why the flat VAT scheme for taxis is 10%, because it assumes that on average half the VAT would be credited back if you itemized all the receipts.
Well explained Tom
very interestin Tom keep it up.
The real answer is how much go though the books!
Mostly card payments nowadays.
That’s a good and interesting class on your profession
Nice one Tom!
Would being VAT-registered mean though that you could claim back all the VAT from the petrol? Should be quite an amount no :) & is there VAT on charging electric? Not sure haha
Theoretically he could, however for most forms of energy VAT is only 5% not 20% that he'd have to collect so it doesn't really help to offset that much. Also, even if he could do that, because he can't charge the extra 20% VAT to the customer, that is still coming out of earnings and effectively reducing his hourly rate compared to someone earning less than £85k. At that point as a sole trader, I think I'd probably choose to work less hours for more hourly pay and still have a comfortable living - like Tom said I think quality of life becomes the deciding factor not the money
yeah, i'll stick to driving trains thanks!! its so much easier than the shite you have to go through!
I presume only old drivers pay off their taxis completely or cabs?
I do three days a week. As you get older I think driving 5 or 6 days a week in London just loses its appeal. Obviously I’m more dinosaur Dave 😂
At the same time, working just three days a week and making a living (even if you make a bit less) is the dream for a lot of people!
How much do you earn doing 3 days a week. I’m doing the knowledge atm. Or can’t you say 😂😜. It must be ok. If your only doing 3 days
@@jimmybaldwin737 I’m semi retired. I have an early pension from another career every month 👍
I WAS TOLD PEOPLE USED TO BUY MULTIPLE PROPERTIES AS A TAXI DRIVER THEN RETIRE AT 50
The media are good at making false wage statements online. Just like a few years ago with the HGV driver shortage was on. Daily mail saying average wage was £70 k per year. Not accurate. Most standard drivers don’t earn that kind of money, for for doing average hours.
I gave up Taxi got my Gas ticket I made £80 k pre tax last year and I should be making a bit more this year.
you mean gas engineer?
@@shaftt4067 Yes.
Where you make the course? Do you done the college or just courses
That s,a good move happy to see people get proper trades
@@shaftt4067 I was a time served plumber before I was a taxi driver so it was just a refresher course yo get my gas safe.
Wow. I’m doing the opposite 😂. I did a gas engineer training. Got my gas safe. But I’m doing the knowledge now. Why did you give up the taxi trade ?
At start of video when you say people say u should be a bus driver or hgv driver it’s not all bout money but enjoyment and also the situation ie flexibility as you ur own boss and can choose your own shift pattens and times hours to work
Wow, Tom. Very well explained I'm so impressed with your intelligence and research 👏 love the videos...
I think we need a video on drivers' etiquette as it's going down the pan.
But... how much are you earning? Haha all good if you don't want to say. But this was super interesting regardless, and doesn't have a clickbait title, so nice work!
You must go through a fair amount of podcasts/audiobooks...one perk of the job I assume?
Massive amounts! Best learning!
HMRC could work out a pretty good average if they wanted too, couldn't they?
Have a great weekend Tom :) I'm still trying to spot out for you on the roads!
Yes but all those cash jobs, no ones seeing that money. And card jobs, theres ways around it
Those days are gone, it's pretty much all contactless now.
2:16 looking at one particular size of ones manhood doesn't necessarily dictate the average size of manhood. Such a perfect comparison. 😆
They should remake vat to only be applied to the part going over.
Would be interested to know how long it’s been £85k.. surely with inflation, a lot more professions will be going into that number
@@TomtheTaxiDriverabout 2017, chancellor frozen it until at least 2026. Stealth Taxes.
Am I right in saying tips are taxable but not subject to NI? Always checking with service staff now if they get them when paying by card etc
Self employed van courier here... Great video as usual buddy. Long time lurker on your channel and a lot of your issues are the same as mine with regards to limitations on earnings.
Just a bit more of a layman's explanation of VAT registration for people...
Being VAT registered can be advantagous when being a sole trader or running a business but it depends on who your customers are... it wouldn't really work for Tom as if he were VAT registered it would mean he would have to charge VAT on all of his fares which, because the average punter who uses him couldn't claim the VAT back, would make him less competitive with pricing and therefore potentially loose him custom.
The work I do on the other hand is all business to business meaning that it is advantagous for me to be VAT registered as it is likely that the companies I'm working for are too. Meaning that when I charge them VAT, they're able to claim it back and so on and so forth for their customers.
You can also claim a percentage of the VAT back on your expenses too (and in transport most of your expenses have VAT). Meaning you can claim VAT back on fuel, vehicle purchases, tyres etc...
I'm on the flat rate scheme which means that I can claim (for my first year anyway) roughly 11% back on all the VAT purchases I have.
Also just for reference you can register to charge VAT if your turnover is less than £85k, it just becomes mandatory if it is more.
Great video pal, keep them up.
Anything under £300 a shift would not be viable time you pay all your expenses and take a wage
You should Google the definition of a wage
Sad but true
@@80skid83 bull shit lol. You are also not exchanging wages. wages and gross earnings are very different. So many people are drips
Love the videos Tom A point though, on your comparison between Dinosaur Dave and Butter boy Ben, you made no provision for depreciation. This would close the gap between them.
This is true. There's a lot of ways to skin the cat.
Drivers who rent for example. or drivers who live in town so can claim 100% of their vehicle and fuel, vs the commuting driver 😊
VAT is just ridiculous you should be able to work and earn as much as you want and not have to worry about earning too much money that you lose money from your net income. Cab drivers need to starts talking to their local MPs to get this legislation changed or at least to give them a tax exemption or you pay VAT. Also idk how being a cab driver is classed as your own business when you work under the TFL umbrella. Its not like if you were a painter and decorator where you get to make your own rules for your company and how you do your job its not like there are regulation on how you have to paint a wall or what you can charge. Being forced to work at a set rate doesn't sound like its completely your own business.
There is not one London taxi driver that would be vat registered
@@NoNonsenseJohnson because yo have to be earning over £72k
@@barrydoherty636 85k?
Bet there’s a few grafters earning that.
"Unless there's another business interest, or he can funnel the VAT bill elsewhere..." he says, on UA-cam 😏
You can just express how much is earned perday to deal with the edge cases
Income Tax and VAT! There is no insensitive or ever as been for the ordinary person to try and better themselves because of it, simple is simple as, always as always is, in one hand out the other,...............
The taxi drivers outside Heathrow charging anything they want ..its a disgrace they are getting away with too...they need to be regulated and very tightly.....
Could you run two companies and have each under the VAT threshold?
Yes, providing they were limited companies, i.e. incorporated companies registered with Company's House. That was, each of those companies is a separate legal person. If instead you were a sole proprietor, then the legal person is YOU, so you couldn't, say, claim to have two separate businesses and each was under the VAT threshold. That would be diagregation - artificially trying to split up something you can't - and the VATman would rub his hands with glee and go after you. VAT has existed in the UK for 50 years, so all sorts of tax avoidance schemes, fraud etc. has played out and there's lots of case law/legal precedents, in other words, it's all been seen and done. Actually, nearly all VAT is collected by BT, Tesco, British Gas etc. from their customers/consumers. Small builders, plumbers, or taxi drivers, even if they are VAT- registered, pay relatively nothing in comparison into the VAT pot, but the same rules must apply to them as BT, Tesco etc. Also, Tom glossed over that VAT-registered busineses can reclaim VAT they are charged, e.g. on fuel, goods/services etc., so they get that 20% VAT back. It's not simply £85,001 turnover = £17K VAT due.
A private hire driver can earn 400 a week after expense.
I earn 700 a week including expense.
After car rental and petrol ,i make 400 a week.
Is it true you can earn up to 3800 a week ?
@@newanas5271
I just reattached this and Aaaaaaooooooch
so does a cab driver register as self employed or can they do limited company? and if so what are implications for VAT
Majority of cabbies are self employed. But self employed of limited company, the VAT liability will remain the same.
@@TomtheTaxiDriver thanks for replying. I find it mad that once 85k it hit turnover-wise,VAT is liable. ridiculous! would've thought profit-only and then at least expenses can count against it
Really Vat need to be changed so everyone pays it say above £1000 (which is the untaxed hobby earning)
It’s actually stopping people growing there business
And it’s so easy to do these days either app based accounting systems
This is actually how it works in the Netherlands, and I think most European countries. There 21% VAT is applied on every euro earned in a professional context, starting at €0. For hobby purposes the first €1000 is VAT free, but professional transactions do not enjoy this exemption.
Seems a bit weird that the UK has a 85,000 pound VAT exemption really.
These older drivers putting younger people off the trade do my nut in! See one tell a kid on the knowledge to give it up. Must want us to move aside and just give the work to Uber! Divs. I’ve been doing it 9 years and never been busier!
Interesting point re the VAT that I didn't think of. Fortunately with my business I can add it onto our invoices. I wonder if there's a way that TFL could allow foreign tourists or visitors to travel VAT free, and then you can reclaim remaining VAT on fuel and expenses.
Do you have a limit to driving hours per day or averaged over a month like hgv drivers do?
No it’s unlimited
They create meter £10 h when is wok is steady
And tell you we we are the cheapest meter in Europe
All about returns!!!!
How can you live comfortably in or around London for less than £100k a year?
I can’t/don’t. Live way out of london
And Dinosaur Dave will still try and nick work from Butterboy Ben
Hi Tom, big fan, just reaching out to say that that Thumbnail looks demonic.
Off the meter jobs ?
so somewhere between 30 and 85k then
2 Hours Heathrow wait would you not use that as your brake and time to do ur finances books or the likes. Maybe if your studying use it as study times book holidays or the little jobs you you never get around to aka usingthe time wisely
Im pretty sure it's working out for him. After all you are leaving a comment on his popular UA-cam channel ;)
Am I being daft here? If the driver is VAT registered doesn't it mean they add vat to the cost of the journey, so the customer ends up paying the VAT. I thought the whole idea of VAT is that the customer always pays, while the supply chain pay one another so none lose out?
Only is the company (sole trader) terns over £85k a year
There are some benefits, you can them claim back vat off costs. To cab, fuel, card payments, maintenance.
I bet it’s worth changing vat if you can turn off £75k
Does anyoke know how to fet to get tour guide badges
If your payed cash no one knows how much you earn. Card payments are a different matter. Cash can be squirrelled away. I wonder how many cab drivers declare card payments because they’re into your bank and I wonder how many declare half the amount of cash payments they take. If I was in the same position, I would do exactly the same fuck the taxman. 😅😅
i got lost at the end because im a thick bastard
DO NOT FOLLOW THIS VIDEO FOR TAX ADVICE, it’s all wrong and Tom’s accountant obviously is not good. I love all your other videos though Tom!
Hence why I subtitled it on screen.
Feedback would be appreciated?