Can’t make ends meet? We look at the pros and cons of becoming a ride-hail driver in 2024
We are hearing more personal stories of people from highly skilled careers not being able to make ends meet. With more taxes potentially on the way, ride-hailing platforms like Uber, Lyft, and Bolt are attracting a growing number of people from all walks of life seeking additional income. But is becoming a ride-hailing driver the right move for you?
We explore the pros and cons, delve into income and expense considerations, and examine recent industry developments that could influence your choice of platform.
The Appeal of Flexibility
One of the biggest draws of ride-hailing is the flexibility it offers. Drivers can set their own hours, work as much or as little as they want, and even choose when and where they want to drive. This makes it an attractive option for students, parents, retirees, or anyone seeking a flexible work arrangement.
Financial Considerations
Earnings can vary greatly depending on factors like location, time of day, and demand. While some drivers report earning a decent income, others find it challenging to make ends meet after factoring in expenses like vehicle maintenance, fuel, and insurance. It’s essential to research potential earnings in your area before committing. It may be wise to promote your services in your local community, especially in rural areas where ride-hailing is not as common or you see a particular customer market (i.e. elderly people needing to get to appointments or to the shops, tourists, school runs, airport runs, etc.)
Contractor vs. Employee Debate
The classification of ride-hailing drivers as independent contractors rather than employees has been a contentious issue. This classification affects drivers’ rights and benefits, including access to minimum wage, overtime pay, and sick leave. This is the price drivers often pay for flexibility.
Bolt’s New Driver Initiative
Bolt, a ride-hailing company operating in the UK and other markets, recently introduced a new programme aimed at improving driver conditions. They have included features like minimum earnings guarantees, in-app tipping, and accident insurance. While welcomed by some drivers, others remain sceptical, calling for more comprehensive changes.
Bolt’s new initiatives became effective August 1, 2024. Here are the additional benefits for registered PHV drivers on the Bolt Platform:
- Journey Fee Supplement: If a driver’s total earnings fall below a calculated minimum based on the National Living Wage, Bolt will pay the difference.
- Holiday Pay Supplement: Drivers will receive an additional payment, calculated as 12.07% of earnings, intended to facilitate taking time off.
- Eligibility: To be eligible, drivers must be onboarded to the platform and comply with all relevant laws and regulations.
- Termination/Modification: Bolt reserves the right to change or end these terms at any time with prior notice.
Should Other Companies Follow Bolt’s Initiative?
Whether other ride-hailing companies should replicate Bolt’s initiative is a subject of ongoing debate. Some argue that such initiatives are essential to improve driver well-being and ensure fair compensation. Others worry that it could increase costs for companies and lead to higher fares for passengers.
In a City A.M. report, Andy Prendergast, GMB National Secretary gave his views on the initiative:
Bolt is currently fighting a legal case launched by GMB on behalf of drivers over their status as workers which would guarantee them the minimum wage and holiday pay. It has fought these claims for years. To now offer these benefits within weeks of the tribunal is a cynical ploy. It’s too little, too late.
The US Landscape and Proposition 22
In the US, the debate around driver classification culminated in California’s Proposition 22, which passed in 2020. This proposition allowed companies like Uber and Lyft to continue classifying drivers as independent contractors while providing some additional benefits like healthcare subsidies and accident insurance.
As of the time of writing and according to a report by JDSupra, the California Supreme Court has upheld the California law that classifies drivers for app-based transportation companies, such as Uber, Lyft, or DoorDash, as “independent contractors and not employees, provided the company does not (1) set drivers’ hours, (2) require acceptance of specific ride and delivery requests, or (3) restrict working for other companies. As a result, app-based drivers are not covered by California workers’ compensation laws, which generally apply to employees and not to independent contractors.”
Other Ride-Hailing Companies in the UK and US
In the UK, several ride-hailing companies operate alongside Uber and Bolt, including Ola, Free Now, and Gett. In the US, Lyft remains Uber’s main competitor, with smaller players like Via and Wingz also operating in certain markets.
Average Expenses for Ride-Hail Drivers in the UK
The average expenses for ride-hail drivers in the UK can vary depending on several factors, including:
- Vehicle Type: The type of car you drive will significantly impact your fuel and maintenance costs. Larger vehicles tend to consume more fuel and may require more frequent maintenance.
- Driving Hours: The more hours you spend driving, the higher your fuel and maintenance costs will be. Additionally, longer hours might necessitate more frequent car washes and cleaning.
- Location: Fuel prices and maintenance costs can differ depending on your location in the UK. Urban areas might have higher fuel costs and maintenance fees due to traffic congestion and wear and tear on the vehicle. Green/clean air zones will also have fees to consider.
- Insurance: Ride-hail drivers need specific private hire insurance, which can be more expensive than standard car insurance.
Estimated Average Expenses:
| Expense Category | Estimated Cost (Per Month) |
| Fuel | £200-£400 |
| Vehicle Maintenance | £100-£200 |
| Insurance | £150-£250 |
| Cleaning | £50-£100 |
| Total | £500-£1000 |
Please note that these are just estimated averages, and your actual expenses may vary.
What expenses can you claim?
Ride-hail drivers must keep accurate records of all their expenses, including receipts and invoices. These records are crucial when completing a self-assessment tax return, as they are the basis for claiming allowable expenses and reducing the tax bill.
Ride-hail drivers in the UK can claim a variety of expenses to reduce their taxable income. These expenses fall into two main categories:
Allowable Expenses
- Vehicle Costs:
- Fuel
- Repairs and maintenance
- Cleaning
- Insurance (if it’s a specific private hire insurance policy)
- Road tax
- Depreciation (using a simplified ‘capital allowances’ method)
- Interest on vehicle finance (if applicable)
- Running Costs:
- Phone bills (portion used for work)
- Parking fees
- Congestion charges
- Toll fees
- Breakdown cover
- License fees (if applicable)
- Other Expenses:
- Accountancy fees (for help with tax returns)
- Advertising and marketing costs
- Membership fees for professional organisations
Important Considerations
- Private Use: If you use your vehicle for both personal and business purposes, you can only claim the proportion of expenses related to business use.
- Record Keeping: Maintain meticulous records of all your income and expenses throughout the year. This will make the tax return process much smoother.
- Professional Advice: If you’re unsure about which expenses you can claim or how to calculate them, seek advice from a tax professional specializing in the gig economy.
For more information, you can refer to resources like:
- Earnr: https://www.earnr.co.uk/guides/uber
- Zego: https://www.zego.com/blog/how-much-do-uber-drivers-make/
- G&M Direct Hire: https://gmdirecthire.co.uk/blog/10-expenses-to-claim-as-a-phv-driver-in-london-during-self-assessment
Please note that this information is a general guide and not a substitute for professional tax advice. Regulations may change, so always consult with a tax expert to ensure you’re claiming the correct expenses.
Average Income Comparison (8 Hours vs. 4 Hours per Day)
Based on an estimated average earning of £15.76 per hour (after Uber’s commission) and an average of two rides per hour:
| Working Hours per Day | Rides per Day | Gross Daily Earnings | Gross Monthly Earnings* |
| 8 | 16 | £252.16 | £5,043.20 |
| 4 | 8 | £126.08 | £2,521.60 |
Important Considerations:
- Net Income: Remember to subtract your expenses from your gross earnings to determine your actual net income.
- Flexibility: Working 8 hours per day might offer higher earnings potential, but working 4 hours per day allows for more flexibility in your schedule.
- Other Factors: Your income can also be affected by factors like surge pricing, tips, and the specific ride-hailing platform you choose.
It’s crucial to carefully consider your expenses and desired income level when deciding how many hours to work as a ride-hailing driver.
The Bottom Line
Becoming a ride-hailing driver can be a viable option for those seeking flexible income, but it’s crucial to weigh the pros and cons carefully. Factors like potential earnings, expenses, and the ongoing debate around driver classification should all be taken into consideration.
As the gig economy continues to evolve, it’s likely that we’ll see further developments in the ride-hailing industry, with companies exploring new ways to balance driver well-being with business sustainability. Whether you’re considering a side hustle or a full-time career change, staying informed about these developments will be crucial in making an informed decision.
