Mileage versus actual running costs, PPE and gear, the trading allowance, National Insurance, VAT and MTD explained for UK self-employed despatch riders.
Riding despatch is a high-mileage, low-margin trade, and that single fact shapes the whole tax picture. A motorcycle courier covering 200 or 300 miles a day for a same-day firm, or stacking app drops for a food and parcel platform, burns through fuel, tyres, chains and brake pads at a rate office-based freelancers never see. The tax you owe is decided almost entirely by how well you capture those miles and running costs, because they are what turns a big-looking turnover into a modest taxable profit.
This guide is built around how despatch riders actually earn and spend: choosing between the flat mileage rate and actual vehicle costs, claiming protective gear and kit, handling platform fees, and getting your record-keeping tight enough that the annual return is painless. Riders who log their mileage daily and keep fuel and servicing receipts almost always pay less tax than those who guess at year end.
As a sole trader you pay Income Tax on profit, not on turnover. Profit is everything you are paid for deliveries, minus your allowable business expenses. For 2025/26 the personal allowance covers the first GBP 12,570, then you pay 20% to GBP 50,270, 40% to GBP 125,140 and 45% above, with the personal allowance tapering away between GBP 100,000 and GBP 125,140 to create an effective 60% band. Class 4 National Insurance is 6% on profit between GBP 12,570 and GBP 50,270 and 2% above, with Class 2 NIC settled through Self Assessment.
Scottish couriers pay Scottish Income Tax through six bands (19%, 20%, 21%, 42%, 45% and a 48% top rate) and carry an S-prefixed tax code, while National Insurance stays UK-wide. Welsh riders have a C-coded tax code at rates currently matching the rest of the UK. If you also hold a part-time PAYE job, perhaps warehouse or bar shifts between courier rounds, your tax code can end up wrong and quietly cost you. Run it through the tax code checker if anything looks off.
Plenty of riders start by doing a few evening or weekend deliveries around another job. The GBP 1,000 trading allowance is built for exactly this. If your gross courier income from all platforms is GBP 1,000 or less in a tax year, it is tax-free and you do not need to register for Self Assessment for it. The moment you cross GBP 1,000 you must register and report the full amount.
Once you are over the threshold you choose each year between deducting the flat GBP 1,000 trading allowance instead of working out expenses, or deducting your real allowable costs if they come to more. You cannot do both. For a courier this choice is almost always clear: your mileage alone usually dwarfs GBP 1,000, so claiming actual costs (especially the mileage figure below) is the right move. The trading allowance only wins for a casual rider doing a handful of local drops with minimal mileage.
This is the single most important tax decision a courier makes, because the bike is the business. HMRC gives you two methods and you pick one per vehicle.
Simplified mileage rate. You claim a flat 24p for every business mile ridden on a motorcycle. That one rate is deemed to cover fuel, servicing, repairs, insurance, road tax and the bike's depreciation. You keep a mileage log and multiply. Nothing else about the bike is claimed separately, and you cannot also claim capital allowances on it. Use the mileage allowance guide to see how the rate is applied.
Actual running costs. You instead claim the genuine business proportion of every vehicle cost: fuel, insurance, road tax, MOT, servicing, tyres, chains, brakes and repairs, plus capital allowances (writing-down allowance) on the cost of the bike itself. You must split each cost between business and private use, so a rider who also uses the bike at weekends claims only the business share.
For a high-mileage courier the 24p flat rate is usually both simpler and generous, because at 30,000 business miles a year it gives a GBP 7,200 deduction with almost no paperwork beyond the log. A rider on an expensive, finance-heavy bike with very high servicing bills might do better on actuals, so it is worth working it out both ways in your first year, then sticking with the method you chose for that bike. Whichever you use, a clean daily mileage log is non-negotiable, because HMRC can ask you to prove the business miles.
Beyond the bike itself, a despatch rider has a specific kit and platform-cost list. An expense is allowable when incurred wholly and exclusively for the business.
| Expense | What qualifies | Notes |
|---|---|---|
| Business mileage | 24p per business mile on the motorbike | Or actual fuel/servicing/insurance if you chose the actual-cost method |
| Protective riding gear | Helmet, armoured jacket, gloves, riding boots, waterproofs, base layers | Genuine PPE for the job, fully allowable |
| Hi-vis and branding | Hi-vis vest or jacket, any platform-branded gear | Not everyday clothing, so it qualifies |
| Delivery equipment | Top box, panniers, thermal delivery bag, cargo straps, phone mount | Capital items via Annual Investment Allowance |
| Phone and data | Business share of handset and a data plan for the courier app | Apportion out private use |
| Platform fees | App commission, service fees and any subscription a platform charges | Report income gross, deduct the fee |
| Sat-nav and apps | Navigation subscriptions, route and earnings-tracking apps | Fully deductible running costs |
| Parking, tolls and congestion | Business parking, the Dartford Crossing, tolls, ULEZ where applicable | Penalties and fines are never allowable |
| Insurance and breakdown | Courier/hire-and-reward motorcycle insurance, breakdown cover | Goods-in-transit cover too if you carry it |
| Accountancy and bank fees | Bookkeeping, Self Assessment, business banking | Fully deductible |
This is where couriers differ most from desk trades. A helmet, armoured jacket, gloves, riding boots and waterproofs are bought specifically to do the job safely, so HMRC treats them as allowable, unlike ordinary clothing. The same goes for a hi-vis vest and any platform-branded outerwear. Replacements bought because gear wears out or fails are deductible too. The line HMRC draws is dual-purpose: a normal pair of jeans or trainers you happen to ride in is everyday clothing and is not allowable, even if you only wear them for work.
You cannot claim parking or speeding fines, the private share of dual-use costs like your phone, or everyday clothing. If you have no fixed business base, the cost of getting from home to your first pickup can be ordinary commuting rather than business travel, so be careful which miles you log. The cost of getting your A2 or full licence is not allowable because it qualifies you to ride rather than maintaining an existing trade skill; an advanced or defensive-riding course taken to improve in an existing courier trade is more defensible.
Take a full-time same-day rider turning over GBP 34,000 across two platforms, covering 28,000 business miles in the year and using the simplified mileage method.
Income: GBP 34,000 (platform payouts and direct same-day jobs)
Allowable expenses:
Taxable profit: GBP 34,000 minus GBP 11,100 = GBP 22,900
Income Tax: GBP 22,900 minus GBP 12,570 = GBP 10,330 at 20% = GBP 2,066
Class 4 NIC: GBP 10,330 at 6% = GBP 620
Total tax and NIC: roughly GBP 2,686 for the year, plus Class 2 NIC settled through Self Assessment. Notice how the mileage claim alone wiped out more than a fifth of turnover. Run your own figures through the sole trader tax calculator to see your number, and if you mix courier work with PAYE shifts, the multiple-income calculator shows how they stack.
For a despatch rider, the mileage log is the most valuable document you own. Every business mile you fail to record is profit you pay tax on for no reason.
On top of Income Tax you pay National Insurance on profit. Class 4 NIC is 6% on profit between GBP 12,570 and GBP 50,270 and 2% above, and Class 2 is collected through Self Assessment. Class 2 matters more than its small size suggests: it builds your State Pension and benefit record. If a quiet year drops your profit below the GBP 12,570 small-profits threshold, you can choose to pay Class 2 voluntarily to avoid a gap in your contribution record, which is almost always worth doing for the pension years it buys.
You must register for VAT once taxable turnover exceeds GBP 90,000 in any rolling 12-month period. Most solo riders never reach this, but a very busy courier, or one running a couple of riders, can. The test is rolling, so watch it month by month rather than waiting for the tax year to close. If you do register, the Flat Rate Scheme can cut the admin for a courier with few VAT-bearing costs, though the mileage you claim for Income Tax does not carry VAT, so model both standard and flat-rate VAT before opting in. Adding VAT to platform work usually means absorbing it unless the platform handles it for you.
Making Tax Digital for Income Tax Self Assessment replaces the once-a-year return with quarterly digital submissions and a year-end finalisation. The thresholds are based on gross income, not profit:
Because couriers run high turnover on thin margins, many will be pulled in by gross income well before their profit looks large. A rider turning over GBP 40,000 from app deliveries is in the April 2027 wave even if profit after mileage is half that. The upside is that MTD suits this trade well: you already get digital payout statements from platforms, so feeding mileage and income into compatible software as you go is a natural fit. Our guide to MTD for sole traders walks through the quarterly rhythm.
Not logging mileage daily. The mileage claim is your biggest deduction and the easiest to lose. Reconstructing 28,000 miles from memory in January is impossible, so log it as you ride.
Recording income net of platform fees. Report the gross amount the platform shows you earned and deduct the commission as an expense, so your figures reconcile with the platform's records.
Switching mileage and actual costs mid-bike. Once you pick a method for a vehicle you must keep it for that bike, so choose deliberately in year one.
Forgetting Class 2 in a lean year. If profit dips below the small-profits threshold, paying Class 2 voluntarily protects your State Pension and is cheap insurance.
Treating everyday clothes as gear. Protective riding kit and hi-vis are allowable; ordinary jeans, trainers and jackets are not, even if you only wear them to work.
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