HGV and haulage accountants for owner-drivers and hauliers

Owner-driver accountants: how are sole traders and companies taxed?

Sole traders report profit on a Self Assessment tax return: for 2025/26, the online return and tax owed are due by 31 January 2027. You pay Income Tax plus Class 4 National Insurance: 6% on profits between £12,570 and £50,270, then 2%.

A limited company pays Corporation Tax instead. But an operator's licence cannot be transferred: the company needs its own licence before it runs the lorry, so apply at least 9 weeks ahead and tell the traffic commissioner about the change within 28 days.

We prepare Self Assessment returns and help set up new limited companies.

What does a haulage company need from its accountant?

A haulage company usually files accounts at Companies House within 9 months of its year end and its Company Tax Return within 12 months. Corporation Tax is usually due 9 months and 1 day after the period ends: 19% on profits up to £50,000, 25% above £250,000, with a sliding rate (marginal relief) between.

Employer National Insurance on drivers' pay is 15% above £5,000 a year, and eligible employers can claim up to £10,500 Employment Allowance for 2026/27. Workplace pension duties start the day your first driver starts.

We prepare annual accounts and the Corporation Tax return together, and run payroll and auto enrolment.

Can I claim capital allowances on a lorry or tractor unit?

Yes. Lorries, vans and trucks get more tax relief on their cost (capital allowances) than cars, because they are built to carry goods.

Sole traders on the cash basis, the default since 6 April 2024, deduct a lorry's cost as an expense. Otherwise, these allowances apply:

• Annual Investment Allowance (AIA): 100% of the cost of new or second-hand lorries, vans and equipment, up to £1 million a year, for sole traders, partnerships of individuals and companies. At this level since 1 January 2019.
• Full expensing: 100% of the cost of new, unused lorries, vans and equipment, for companies only. In force since 1 April 2023.
• 40% first-year allowance: new, unused lorries, vans and equipment (main-rate assets) bought from 1 January 2026, for companies and sole traders. Legislated in the Finance Act 2026 and in force.
• Main pool: any cost these do not relieve gets 14% a year (18% before April 2026).

Worked example: how much tax does a tractor unit save?

Gary (hypothetical) is a self-employed owner-driver in England. In July 2026 he buys a second-hand tractor unit for £40,000; his 2026/27 profit before that is £75,000.

He deducts the full £40,000 (through AIA or as a cash basis expense), so his taxable profit is £35,000. After his £12,570 Personal Allowance, Income Tax at 20% on £22,430 is £4,486 and Class 4 at 6% is £1,345.80: a bill of £5,831.80.

Without it, £24,730 of his profit falls in the 40% band and his bill is £20,188.60, so the deduction saves £14,356.80 for 2026/27.

Two things change the answer: selling the unit later usually adds the sale price back to his profits (or reduces any pool balance first), and Scottish taxpayers use Scottish Income Tax bands.

Can I reclaim VAT on a lorry, fuel and repairs?

If you are VAT-registered, usually yes. VAT on a lorry or van used for the business is reclaimable, and HMRC ignores incidental private use of most commercial vehicles. A vehicle with a payload of 1 tonne or more is not a car for VAT, so the car block does not apply.

You can reclaim all the VAT on fuel for a vehicle used only for business, but if you choose not to reclaim fuel VAT on one vehicle, you cannot reclaim it on any. VAT on repairs and maintenance is usually reclaimable.

Registration is compulsory once taxable turnover passes £90,000 in a rolling 12 months. We prepare VAT returns under Making Tax Digital; each is usually due 1 month and 7 days after the VAT period ends.

What night-out allowance can lorry drivers claim?

Employed drivers: HMRC's agreed haulage industry rate, in place since 1 January 2013, is up to £34.90 a night for UK overnight stays, or £26.20 with a sleeper cab, free of tax and National Insurance.

The employer needs an HMRC approval notice and a system for sample checks of claims, and cannot pay again for meals the rate covers.

The £34.90 rate is for employers. Self-employed owner-drivers claim the reasonable cost of meals on nights away, including nights in the cab, backed by records made at the time.

How much money do I need for an operator licence?

You usually need a goods vehicle operator's licence (O licence) for lorries over 3,500kg gross plated weight. The money you must show (financial standing) is not a fee: it must stay available while you hold the licence.

The amounts in the table have applied since 1 January 2021: the standard ones are fixed in law, and the restricted ones are set in the Senior Traffic Commissioner's directions.

A standard licence for 3 lorries needs £17,000 (£8,000 plus £4,500 twice). On application, traffic commissioners average 28 days of bank statements and add any formal overdraft, so one good day is not enough; existing operators are usually asked for 3 months.

Annual accounts only count as evidence if certified by someone eligible to act as a statutory auditor. The rules are different in Northern Ireland.

When does Making Tax Digital apply to hauliers?

Sole traders must keep digital records and send quarterly updates through software (Making Tax Digital, or MTD, for Income Tax) once turnover from self-employment and property passes a limit: from 6 April 2026 if over £50,000 in 2024/25, 6 April 2027 if over £30,000 in 2025/26, and 6 April 2028 if over £20,000 in 2026/27.

The 2026 stage is in force; HMRC's guidance sets the later dates. Updates are due by 7 August, 7 November, 7 February and 7 May. Companies are outside MTD for Income Tax.

Common questions

Your next step

Tell us how many vehicles you run, how you trade (sole trader or company) and your year end. Call 0113 460 1786, email ask@hca-accountants.com or use our contact page.

Related pages

• VAT returns
• Accounts preparation
• Payroll processing
• Corporation Tax
• Company formation
• Contact us
• Self Assessment
• Auto enrolment
• Tax rates and allowances 2026/27