I’m a cabbie on £20,000 a year — the Budget is going to make my life unbearable

I’m a cabbie on £20,000 a year — the Budget is going to make my life unbearable Sarah Davidson Published December 1, 2025 7:00am Share this article via whatsappShare this article via xCopy the link to this article.Link is copiedShare this article via facebook Comment now Comments Lee’s already worried about making ends meet (Picture: Getty Images)

In the Autumn Budget last week, Rachel Reeves announced national insurance and income tax thresholds would be held at 2022 levels for another three years.

Dividend tax rates are also due to be raised, while EV drivers will face a new excise duty of up to 3p per mile.

These changes are a perfect storm for this week’s Money Problem reader, Lee, 34, from Stafford, who earns about £20,000 a year as a self-employed cabbie.

Already struggling to make ends meet, he reached out to Metro consumer champion, Sarah Davidson, to share his concerns about what the future might hold for workers like him.

The problem…

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When I read about what the Government is doing in the Budget last week, my heart sank.

I consider myself to be a normal working person, I earn around £20,000 a year driving a taxi in Stafford and I’ve noticed a really big change in how far my pay cheque goes each month – especially as I’ve got three children.

I know a lot of the problems the country faces are really hard to solve, but I just find it absolutely disgusting when the government pretends that things are fine and it’s okay to keep taxing us more and more. It also really annoys me that they hide the fact they are taxing working people more on their income by freezing our thresholds. It just feels like a total sham.

Also, because I’m self-employed the dividend tax rise is just another massive blow. It’s like they assume all business owners are millionaires. And I’m going to get hit on the electric car mileage charge.

Tax changes will cut his real terms income for the next three years (Picture: Getty Images)

The last few years have been incredibly tough on everyone but for those of us who don’t earn the big bucks, it’s getting to be unbearable.

I genuinely don’t know how I’m going to feed my family in three years’ time. Realistically, I need to plan how we’re going to cope but I don’t really know what everything means for me personally – can you help?

The answer…

Lee, I hear you. Unfortunately, we’ve now had years and years and years of seeing the value of our incomes fall in real terms.

Much higher energy costs, more expensive food and insanely high and still rising rents haven’t helped, but it does feel like a barrage of crap keeps coming our way on the money front.

You’re bang on about income tax too. The Chancellor freezing thresholds for three more years will mean actual money, actually taken out of working people’s pockets – contrary to Reeves claiming the opposite no fewer than four times during her speech.

While it doesn’t affect you (unless you increase your income) it will drag almost a million people into paying tax at the higher rate of 40%. And according to think tank the Resolution Foundation, this extension will cost the average a typical employee £220 extra every year.

Comment now How do you feel about the changes announced in the Autumn Budget?Comment Now

In terms of your situation, tax firm Blick Rothenberg calculates that someone earning £20,000 is almost £600 worse off today than they were three years ago. By 2031, that will be over £1,000 worse off.

Next – dividend income. From April 6 next year, the ordinary rate will go up two percentage points to 10.75% and the upper rate will be increased by the same amount to 35.75%.

From the sounds of it, you’re like millions of self-employed ‘business owners’ who use a limited company structure to manage their income.

One advantage of this is that your company can pay you as an employee up to the personal allowance of £12,571 without you having to pay income tax. It’s very common for people to then take the rest of their income as dividends because it is taxed at a lower rate than earned income.

For you, this would mean that this financial year, you’ll likely pay around £650 in tax. From April 2026, that will rise to £806 roughly.

EV drivers also face a new excise duty of up to 3p per mile (Picture: Getty Images)

Now, tax on your mileage – given you’re a cab driver this one’s going to hurt you more than most.

From April 2028, electric vehicle owners will start paying a 3p charge per mile they drive. This will be levied on top of the £195-a-year vehicle excise duty electric car drivers have had to pay since April this year.

Taxi Point, an industry publication, calculates the average taxi driver can clock up anywhere between 25,000 and 45,000 miles a year, with cabbies in rural areas likely to be at the higher end of this.

Brace yourself for this: if you’re driving 45,000 miles you’ll have to pay £1,350 a year from 2028. Ooof.

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There were some plus points for you though which should partly offset the downsides. The Resolution Foundation has worked out that a typical family will gain £234 between April next year and April 2027 from energy support and fuel duty measures announced at this Budget.

You also have three children, so you’re eligible for a boost in child benefit under updated universal credit rules. From April next year, you’ll be able to claim for all your children rather than just two, adding another £3,500 into your household income per year.

With tax and benefits, it’s virtually impossible for me to be accurate as there are a lot of variables at play and each individual is different.

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However, I hope this gives some comfort and helps you to plan for your future.

Do you have a story to share?

Get in touch by emailing [email protected].

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