Tax Guide for Driving Instructors: Registration, Deductions, and Financial Tips

Driving Instructors

A recent FBTC survey found that 86% of driving instructors surveyed reported being satisfied with their role. Job satisfaction paired with attractive hourly rates of income make becoming a driving instructor a very rewarding industry to be a part of!

FBTC offers advice, support, and reassurance for driving instructors to help ensure your tax affairs don’t add strain to your business. With over thirty-five years in the industry, FBTC has built strong relationships with key associations and regularly attends industry trade events. We understand your journey, from instructor training to standards checks, and know the expenses you’ll face.

Driving instructors must register for self-assessment with HMRC

As a self-employed driving instructor you must register for self-assessment with HMRC, and the date the business must be registered from is from the first day you begin to teach for reward.
This process involves declaring your income and paying the appropriate amount of tax and National Insurance contributions. Failure to register can result in penalties and higher tax payments. Even if you are operating as a Potential Driving Instructor (PDI) whilst training to become an Approved Driving Instructor (ADI) you must register with HMRC and will need to do a tax return in the relevant year. Some individuals have thought because they are training they didn’t need to follow any HMRC rules until they were fully qualified, this isn’t the case, the trade needs to be declared as soon as income is received.

Tax Obligations for Driving Instructors

Driving instructors must file annual self-assessment tax returns, declaring their income and claiming any allowable expenses. This process ensures that you pay the correct amount of tax and National Insurance contributions. Driving instructors should maintain accurate records of all income received from lessons, whether in cash, bank transfers, or other payment methods. Keeping detailed records will help in calculating your tax liability and claiming any allowable expenses
The best advice in relation to expenses is to keep all receipts. Create a habit of keeping receipts and then you can accurately record your business transactions.

How to save for your tax bill

We advise you to put aside 20-30% of all money you have coming in. So, for every £100 you receive, put aside £20-£30. If you save based on your Turnover, this should be more than enough as you are Taxed on your Net profit AFTER expenses & Personal Allowance has been removed.

Don’t forget those dual controls

One of the very first expenses a driving instructor will incur is likely dual controls – essential, needed, a MUST for safety reasons of course. There are an array of actual car expenses that can be claimed for example fuel, insurance, repairs, and servicing to name a few.
If the vehicle is utilised for both personal and business purposes, it is necessary to allocate a portion of the expenses to accurately reflect business use. It is not only the vehicle you use that might have private use, but other items may also be used for both personal and business use, such as your mobile phone, laptop be

Driving Instructors cannot claim mileage

As a Driving Instructor, HMRC do not allow you to claim mileage. As your car is fitted with Dual Controls, this is not treated as a car anymore, it is treated as Plant & Machinery. HMRC state vehicles classed in this category similar to Black Cabs, cannot claim mileage, they need to record all of their car expenses such as Fuel, Car Insurance, Car Tax, M.O.T

Certain items of expenditure are classed as capital expenditure. These items include cars, dual controls, computers, laptops, printers and sat navs. For these items, you are entitled to a capital allowance to set against your net profit to cover the depreciation of the asset and is in addition to the finance interest mentioned above under vehicle costs. Don’t worry FBTC will calculate the capital allowances for you.

Conclusion

Navigating the tax system can be challenging for driving instructors. However, understanding key aspects of your tax obligations, such as registration, deductions, and filing requirements, can help you manage your responsibilities effectively. By staying compliant with HMRC regulations and keeping accurate records, you can ensure that you meet your tax obligations and avoid penalties.
Our team is here to provide excellent service and solutions tailored to your needs. We support you at every step, from the initial call to ensure we are a right match for you, to the final tax return. Using our expertise, we will help you achieve tax efficiency in your business.