Private Hire in Singapore is getting more common as more and more people are exploring the option of driving a private hire vehicle instead of taxi. This post is to share some of the things to consider when being a private hire driver, as some of these factors would also affect your earnings.
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Things to take note of when being a Private Hire Driver
There are a number of things that drivers have to consider before they start to rent a vehicle or use their own vehicle to drive for Private Hire. Some factors to consider are as follow:
- Income Tax
- Car Insurance
- Personal Insurance
Some little tips to better your earnings and making the ride for passengers much more pleasure.
- Earning Tips
- Driving Tips
Earnings from driving for Private Hire will soon be submitted to IRAS directly through the company, and it would simplify the process of driver having to self declare their revenue to IRAS for tax purposes. Drivers would then need not keep a record of their earnings from Uber/Grab. Things to take note for income tax is that majority of the revenue reported will be considered chargable income and will be subjected to income tax.
Expenses allowed for tax reduction:
- Commission paid to Uber/Grab
- Mobile Data Plan and Moble Device
- Renewal of Business License and PDVL
Not allowed to be considered as expenses to reduce tax:
- PDVL. Initial license is not allowed for tax reduction.
- Motorcar operating expenses such as:
- Rental of Car.
- Petrol consumption
- Car Accessories
- LTA Fees (Car Conversion cost)
- Car Maintenance
- Parking Fees / Fines / Road Tax
- Rental Deposit
The reason why private hire drivers cannot claim the above as expenses as compared to taxi drivers is based on national policy to restrict the car population. That would just mean that taxi is considered a public transport while private hire is still a private transport.
So what does it means to the amount of tax and private hire drivers have to pay?
Assuming both Private car driver and Taxi driver has the same income and expenses. Both is 30 years old. What is the rough tax they have to pay.
|Vehicle Type||Private Hire Car||Taxi|
|Revenue (excluding commission) per day||$200||$200|
|Revenue per year (365 working days)||$73,000||$73,000|
|Mobile Data ($100 per month)||$1,200||$1,200|
|Vehicle Rental ($60 per day)||N.A.||$21,900|
|Petrol ($35 per day)||N.A.||$12,775|
|Total Deductable Expenses||$2,200||$36,875|
Thus the tax that a private hire driver has to pay is $2706 as compared to if he drives a taxi of $414.38. This is a large figure for most people and for most people to consider before they start their driving with private hire vehicles.
As for Medisave contribution, it still goes to benefit the individual thus it may not be bad having to contribute to medisave. The above figure just shows the compulsory Medisave contribution one has to make.
There are a couple of things to take note when getting insurance for your own car or when you rent a car to drive.
For drivers with own car (under own name and not company):
- You are to get personal car insurance. However you have to indicate to your insurance company that you are driving the car for Private Hire use and whether they cover. If they do, the premium would usually be hire as the duration the vehicle on the road is higher, which equates to higher risk.
- Comprehensive insurance or not. This would determine if the insurance cover third party. This means if you were to know another person, would your insurance pay for the damage of the other person if it is your fault. Most people will get comprehensive insurance.
- Policy Excess. How much you have to pay first before the insurance company cover the rest of the damage.
For drivers with own company car:
- You are to get commercial car insurance. The difference is that it is under a company so commercial insurance is required. The maximum No Claim Discount (NCD) for commercial insurance is 20%. It is much lower than the 50% NCD for personal car insurance.
- Comprehensive insurance or not.
- Policy Excess.
For drivers renting from other company.
- Policy Excess. Please take note of the excess that you require to pay in the case of accident. If the excess stated is 2k for own and third party each, it would mean you have to pay 2k for own vehicle damage and 2k for third party damage. That is 4k excluding GST. Clarify when in doubt and have it stated clearly before signing any agreement.
Since you are driving on the road most of the time, there would be an increase risk in getting involved in an accident. Both Uber and Grab has insurance that cover the driver’s legal liability for the passenger and property. Grab has additional Personal Accident Insurance that cover the driver, passenger or third party up to USD$250,000 per vehicle. However, these insurance may not be sufficient if accidents do happen, so it is important for drivers to purchase their own insurance.
For Passengers, some of the insurance policy from different insurers provide additional sum assured for accidents while commuting on public transport such as Taxi. However, Private Hire transportation is still considered private transport and these additional sum assured is not valid if it happens in a Grab or Uber vehicle.
- When you rent a car to drive, try to meet some of the incentives, if not it is not really worth the effort. Unless you have other purpose for renting the car.
- Be discipline. Set your targets daily and hit them
- Stay in boost zone or drive back with empty car. basically make sure you keep on driving or do what is best to have a passenger in your car, if it means driving back to crowded area with an empty car.
- Drive during peak periods.
- Use the fuel card to save more on fuel.
- Do not ram your accelerator. Drive slowly and safely. you will save on petrol and avoid accident. Passengers will appreciate a safe ride. Unless request by passenger to speed up as they are late.
- CBD area during peak period lots of passengers. But passenger cancel trip if you stuck in jam. Don’t pick up passenger if you know you going to take a long time to get to their position.
- Off your app when you are near the edge of boost zones. This is to prevent being assigned jobs outside of boost zone and you do not earn the incentives.
- If passenger asked you to go from Point A to Point B. Half way got back to Point A to take things then go back Point B again. You will only be paid from Point A to B. Write in to Uber Support to ask them to review the fare.
- Make sure both you download both driver and passenger app. Open both. See where the other drivers are by using the passenger app. Do not crowd around the same area.
- Don’t chiong a lot when you start. you will burn out easily. Make sure you pace yourself and set achievable targets to hit. Health is still more important.
- When fetching children, lock the door. Parents will appreciate such actions.
- Bring some plastic bags if you are driving at night and fetching people that may become Merlion.
- If passenger really do mess up your vehicle, do take photos and submit to customer service to claim back part or all of the cleaning fee required.
Need more information or a Referral?
If you still decide to drive for uber and grab after knowing all the tax requirement, do feel free to send me an email using my contact for a referral. I will be sharing a portion of the referral incentive that I will be getting back with the drivers. I will provide more information when you PM me.
For those having other questions or need assistance on topics as insurance and earnings can also send me an email.