Becoming a driving instructor can be a fulfilling profession that offers a competitive annual salary, the convenience of choosing your own hours, and the flexibility of being your own boss.
Self-employed driving instructors can gain their qualifications in the way that suits them the most, whether it’s through an intensive course or by training over a longer period of time. But, after putting in hard work to complete their training, the last thing anyone wants to do is pay out more than they need in taxes or running costs.
This article will explore whether you can claim the cost of training to be a driving instructor, as well as look at how self-employed driving instructors pay taxes and what can be claimed as tax-deductible.
Are Driving Instructor Costs Tax-Deductible?
First things first – are driving instructor costs tax-deductible? The great news is that yes, you can claim tax expenses for many costs associated with being a driving instructor. This includes, but is not limited to:
- Fuel costs
- Any on-the-road costs you encounter, such as tolls and parking
- Advertising materials – including paper, printed materials, and business cards
- Any business charges from your bank or insurance
It’s worth noting that the initial cost of training to be a driving instructor is not tax-deductible – you will not be able to claim the cost of your initial driving instructor training against your tax bill. However, any further training courses that improve your knowledge base and skills for your business can be claimed as allowable business expenses. You will also be able to claim tax relief for any costs associated with this, such as travel expenses.
In the next section, we’ll talk you through the process of completing tax returns once you are a fully-qualified driving instructor.
Becoming a Driving Instructor with Bill Plant Driving School
Even though you cannot claim tax expenses against initial training fees, it should not dissuade you from exploring driving instructor training courses.
Job satisfaction should be a key factor for any career change, and helping people pass their driving test can be hugely rewarding. Working as a driving instructor can also provide a competitive wage, especially when working with the Bill Plant Driving School, as our Instructors typically have significantly greater earnings potential than many other driving schools.
Another benefit is that self-employed driving instructors can enjoy considerable tax relief on business expenses. Your tax liability can be significantly reduced when you claim capital allowances and keep detailed records of all allowable expenses.
Learning how to become a driving instructor with Bill Plant Driving School will help you find out how to teach learners, so they become competent. Other courses that can help include intensive driving courses and pass-plus driving courses.
Driving Instructor Tax Return Guide
While you won’t be able to claim against the costs of driving instructor training, that doesn’t stop you from claiming tax relief on any other business expenses while you’re in training. You can start claiming the tax back from business expenses as soon as you register as self-employed.
How to do your tax returns as a self-employed driving instructor
The number one way to make your life as a self-employed driving instructor as smooth as possible is to use the services of a fully-qualified chartered accountant. This eliminates a lot of the need for you to manage your own accounts and filings – which can be daunting, particularly if you’ve never been self-employed before.
If you do choose to manage your tax returns yourself as a self-employed driving instructor, here are the important steps you need to take.
Notifying HM Revenue and Customs
The first thing you will have to do if you are a self-employed driving instructor is to notify HM Revenue & Customs. Most registrations can be completed on the HMRC website and are relatively straightforward to follow.
To complete this process, you will need to enter your personal details, such as name, address, date of birth, and National Insurance number. You will also need to enter when you started self-employment and the work you do.
After completing this information, HMRC will provide you with registration confirmation and your taxpayer’s reference or UTR, which will be unique to you. You can use this information when making payments or contacting HMRC.
Your tax return must disclose your gains and taxable income for the year. The UK tax year runs from April 6th to the following April 5th. Even earnings that have already been taxed should be declared when completing your tax return.
Submitting self-assessment tax returns
Your tax returns can be done in one of two ways: online or on paper. If you submit your tax return on paper, you must have this done by October 31st, after the tax year ends. Alternatively, you can complete your tax return online by January 31st, after the tax year ends.
If you fail to file the tax return on time, a fixed fine of £100 is applied automatically. Further penalties can be applied if the delay continues, so it’s important to make sure that you submit your tax return promptly each year. Consider setting yourself calendar reminders a reasonable length of time before the deadline to avoid incurring penalties.
Paying driving instructor self-employment taxes
Online tax returns must be paid by January 31st, following the tax year’s end. You can pay using online banking, Bank Giro, Direct Debit, and other options.
The final tax bill due will take into account any income that has been declared that has already been taxed.
How long should driving instructors keep records?
Different documents will have different timescales for driving instructors to keep. Because of this, it is advisable to keep all documents for six years as this is the longest period that any document will need to be kept.
Currently, how individuals or businesses keep their documents is entirely up to them. HMRC does not demand any particular format, and it will be down to the individual or any company used to complete tax returns and how this is done.
However, from April 2024, the UK Government’s Making Tax Digital will come into effect. This means that all businesses and individuals will need to submit digital records in HMRC-approved software, such as Sage or Quickbooks. It makes sense for all driving instructors to use software such as this now, to prepare them for April 2024.
As a self-employed driving instructor, it is also a good idea to retain any documentation relating to your finances. This includes receipts, bank statements, income statements, and a diary of your appointments.
Driving instructor tax-deductible expenses
The tax you have to pay will be based on your total taxable income minus any tax-deductible expenses. This is particularly pertinent to driving instructors with considerable costs, as they can reduce their annual tax bill.
Driving instructor vehicle running costs
Some of the most significant expenses associated with being a driving instructor will be related to vehicle running costs. These include:
Fuel – At a time when it seems like fuel costs are always rising in the UK, running a business that is so dependent on fuel might seem counterintuitive. Thankfully, fuel costs incurred through your professional driving will be tax-deductible and significantly reduce your end-of-year tax bill.
Repairs and maintenance – It is almost inevitable that the constant use of your vehicle will result in a need for some maintenance or repairs over the course of a year.
MOT, road tax, and insurance – To get your car on the road legally in the UK, you must have a valid MOT, road tax, and insurance. The costs of each of these can vary depending on the make and age of your car and the region in which you live. They are, however, tax-deductible expenses.
Cleaning and maintenance – Keeping your car clean is important as a driving instructor as it improves visibility and also reflects on your professionalism. You can offset the cost of professional cleaning and cleaning products against your end-of-year tax bill.
Parking and tolls – Other expenses that anyone using a car can face include parking, toll, and congestion charges. Receipts for these should be kept and claimed.
Other driving instructor expenses
Other expenses that help you to run your business can also be claimed. These include;
The internet and mobile phones – There aren’t many businesses that don’t use landlines, the internet, and mobiles to keep in contact with customers and promote themselves. Phone bills, mobile contracts, and internet costs can be claimed as business expenses.
Teaching materials – If you use any guides, teaching aids or books to help your students, the cost of these can also be claimed as business expenses.
Advertising – Advertising costs can help get a business’s name out there and attract new customers. Advertising can come in many forms, including flyers, leaflets, business cards, online advertising, sponsored social media posts, radio, print, and TV ads, and many more.
Postage and stationery – Any postage costs directly related to the business and costs of pens, paper, envelopes, and other stationery can be claimed as business expenses.
Travelling expenses – We have already covered fuel as an expense you can claim. However, if you are travelling because of work, the cost of buses, taxis, trains, boats, ferries, and planes can all be claimed as expenses.
Technology – Any technological equipment used for business purposes, including laptops and iPads, are also tax-deductible expenses.
Franchise fees – If you are self-employed but working as part of a larger franchise, you are able to claim back tax on any franchise fees you pay.
Training – Any training carried out after the business is established can be claimed against as it is an expense paid out to benefit the company.
Business bank account charges – Business accounts at banks come with various benefits, but they usually have a charge. The amount can be claimed as a business expense, along with any payment processing fees you may encounter.
Accountancy fees – If you are paying an accountant to deal with your business accounts, this cost will be tax-deductible. If you are, they should explore all legal options that will help to save you money on your tax bill.
Wages – If your business employs other people, this can be claimed. If it is a family member, evidence of payment to their bank, and they must work for the business.
Any other business expenses – Any costs legitimately incurred in the running of your business can be tax-deductible, even if they’re not explicitly mentioned in the list above. If you’re in any doubt, consult your accountant.
Car investment allowance claims
If you’re operating independently as a driving instructor and purchase a dual-control vehicle, you may be able to claim as much as the total cost in the year it is purchased.
Cars without dual control will have different rates, as detailed below;
- Brand-new vehicles with CO2 emissions below 50 g/km or electric can claim up to 100%.
- Brand-new cars with CO2 emissions between 50 g/km and 110 g/km can claim up to 18%.
- Second-hand vehicles with CO2 emissions below 110 g/km or electric cars can claim up to 18%.
- Any vehicle with CO2 emissions that exceed 110 g/km can claim up to 6%.
Other assets purchased for work may be eligible for capital allowances, and tax relief is sometimes an option on pre-owned personal assets that have been transferred to the business.
Other expense information
If the vehicle you use for your driving lessons is also your personal vehicle, this must be factored in when claiming against expenses. For example, if a car is used for driving lessons for 75% of the time and personal use for 25%, any expenses claimed should be reduced by 25%.
What is the current UK Personal Allowance?
In the UK, you can earn up to £12,570 per year before you start paying tax, and the amount after this will then be taxed. However, the business expenses mentioned in this article can help to significantly reduce your tax bill, as these expenses are offset against the taxable amount due.
Is it worth employing an accountant?
It can be worth employing an accountant as it will save you the time and stress of having to complete your self-assessment tax return. A good accountant will also be able to explore all the legal tax breaks and expenses relevant to your business to help reduce the overall cost. In some cases, the money you can save can be greater than the cost of their services and accountancy fees for your business are also tax-deductible.
Does everyone have to file a self-assessment tax return?
Most self-employed driving instructors will have to file a self-assessment tax return. The only people exempt are those that earn below the £1,000 personal trading allowance. This figure is an allowance you are entitled to in the UK without filing a self-assessment. Because most driving instructors will earn more than £1,000 per year, a self-assessment tax return will be required.
Can clothing be claimed against my self-assessment tax return?
In some cases, you can claim clothing against your self-assessment tax return – typically protective or branded clothing that promotes your business and brand. If you purchase general clothes or want to try and claim to buy new designer clothes, this would not be accepted as a tax-deductible expense.
If you’re interested in training to become a driving instructor with Bill Plant Driving School, there are a range of driving instructor training courses to suit your needs.