When you start out as a self-employed delivery driver, it is easy to look at your day rate and think that is what you earn. It is not. The money that comes in is your income. The money you actually keep, after paying for everything you need to do the job, is your profit.
Knowing the difference helps you plan your week, save for tax and decide whether a route is worth taking. This guide shows you how to work it out in a few simple steps.
Income and Profit Are Not the Same Thing
Think of it like this:
- Income is everything you get paid for your deliveries.
- Costs are what you spend to do the work, such as fuel, van hire and insurance.
- Profit is what is left once your costs are taken away.
The basic sum is:
Income minus costs equals profit.
Then, from your profit, you need to put some money aside for tax and National Insurance. What is left after that is your real profit. That is the money you can spend on rent, food and everything else.
Step 1: Add Up Your Income
Start with what you earn in a normal week. Most drivers are paid either a day rate or an amount per parcel.
For example, our guide on how much parcel delivery drivers earn in Essex shows that a typical day rate sits between around £110 and £140. If you work five days at £140, your weekly income is £700.
If you are paid per parcel, add up the number of drops you made across the week and multiply by your rate. Remember that busy times, like the run-up to Christmas, can push your income up for a few weeks.
Step 2: List All Your Costs
This is the step most new drivers get wrong. They forget small costs that add up over time. Write down everything you spend because of your work. Common costs include:
- Van hire or van payments, if you do not own your van outright
- Fuel, which is often one of your highest costs
- Insurance, including van and goods in transit cover
- Repairs and servicing, such as tyres, oil and brakes
- Phone and data, since you need apps to scan parcels and follow your route
- Workwear and kit, such as a hi-vis jacket, gloves and a trolley
- Parking and tolls, if your route uses them
If you are not sure what cover you need, read our guide to insurance options for delivery drivers before you budget for it.
Many of these costs can be taken off your income before you pay tax. GOV.UK has a clear list of what you can claim as business expenses if you are self-employed. It is worth reading so you do not pay more tax than you need to.
Step 3: Take Your Costs Away From Your Income
Now do the sum. Here is a simple weekly example for a driver earning £140 a day over five days. These numbers are only an example, so swap in your own.
| Item | Weekly amount |
|---|---|
| Income (5 days at £140) | £700 |
| Van hire | −£170 |
| Fuel | −£100 |
| Insurance | −£40 |
| Phone and data | −£10 |
| Kit, cleaning and small repairs | −£10 |
| Total costs | −£330 |
| Profit before tax | £370 |
| Money set aside for tax and National Insurance | −£28 |
| Real profit | £342 |
As you can see, a £700 week turns into around £342 that you can actually keep. That is why it is so important to know your costs before you agree to a route or take on a van.
Step 4: Set Money Aside for Tax and National Insurance
As a self-employed driver, nobody takes tax out of your pay for you. You pay it yourself once a year through a Self Assessment tax return. If you have never done one before, our guide to tax and Self Assessment for parcel delivery drivers explains how it works step by step.
For the 2026 to 2027 tax year, the main figures are:
- You can earn £12,570 in profit before you pay any Income Tax. This is called your Personal Allowance.
- You pay 20% Income Tax on profit between £12,571 and £50,270.
- You pay 6% Class 4 National Insurance on profit between £12,571 and £50,270.
In our example, the driver works 48 weeks a year (leaving four weeks for holidays and time off). Their yearly profit is £370 × 48 = £17,760. Only the part above £12,570 is taxed, which is £5,190. That means:
- Income Tax: £5,190 × 20% = £1,038
- National Insurance: £5,190 × 6% = £311.40
- Total: about £1,349 a year, or roughly £28 a week
A simple habit is to move a set amount into a separate savings account every week. That way, the money is ready when your tax bill is due and you will not get a nasty surprise.
Step 5: Plan for Weeks Off and Quiet Times
When you are self-employed, you do not get holiday pay or sick pay. If you take a week off, you earn nothing that week, but some costs, like van hire or insurance, may still need paying.
To get a true picture, work out your profit over a whole year rather than a single good week. Ask yourself:
- How many weeks will I really work this year?
- Do I still pay for the van when I am not driving?
- Will my income drop after the busy Christmas period?
Putting a little extra aside each week helps you cover these gaps.
Simple Tips to Keep More of Your Profit
- Keep every receipt. A photo on your phone is fine. You need proof of your costs for your tax return.
- Track your fuel. Note how much you spend each week so you can spot any changes.
- Check your tyres and oil. Small checks can stop big repair bills later.
- Compare deals. Shop around for insurance and phone contracts each year.
- Review your numbers every month. A quick check helps you see if a route is still worth it.
Thinking About Going Self-Employed?
Working out your real profit puts you in control. You will know what you earn, what you spend and what you need to save. That makes it much easier to choose the right work for you.
If you want more freedom over your hours and earnings, take a look at our self-employed courier jobs across London, Essex, Kent and West Sussex. Skilled Solutions works with trusted carriers like Amazon Logistics and DPD, and we can help you get started, including support with van rental. Get in touch with our team today on +44 1268 203504 for a chat about what is available near you.
The figures in this guide are examples only. Your own costs, earnings and tax will depend on your route and situation.
