7 min read
As a self-employed driving instructor, you must file a Self Assessment tax return annually. Chances are, you are not an expert in tax law – which means you likely have several questions about where you need to register, what forms to fill out, what information you will need, how much time it will take and so on. Minimise your accounting and taxation woes with this blog:
Taxation tips for driving instructors in the UK
1. Determine your tax status
As a driving instructor, you are considered self-employed and are required to pay income tax on your earnings. If you are unsure of your tax status, you can use the HMRC’s online tool to check or consult a professional accountant for the same.
2. Register for Self Assessment
3. Note down your UTR number
Once your information has been confirmed, HMRC will send you a Unique Tax Reference (UTR) number. You must quote this number or your NI on any payments or communications you share with HMRC.
4. File your tax return
5. Pay your tax bill on time
Accounting tips for driving instructors: Maintain key accounts
- A Self Assessment tax return
- Monthly income and expenses
- Annual P&L (profit and loss) sheet
- Your pupil payment records (this is more for your personal records)
- Record of bank balances, including petty cash and credit card balances
- Capital expenditure, i.e. the cost of acquiring necessary business assets
- Allowable expenses, i.e. direct business expenses that you can claim back
- A record of mileage covered based on the rates set by HMRC (currently 45p/mile for the first 10000 miles and subsequently 25p/mile)
- Travel costs
- Franchise fees
- Parking and tolls
- Petrol and diesel
- Office internet costs
- Road tax and insurance
- Office supplies, like stationery
- Office rent or use of home office
- Vehicle cleaning and maintenance
- Telephone/mobile connection charges
- Bank charges on your business account
- Continuing professional education as an instructor
- Costs of using your home/personal vehicle for work purposes
Always ask your accountant whether any particular cost can be claimed. Unfortunately, the initial training cost to become an instructor cannot be claimed.
2. Can I claim the cost of medical treatment for a condition that directly impacts my ability to work?
In most cases, the answer will be no. This is based on the Norman VS Golder case in 1944, wherein it was ruled that people do not pursue medical treatment merely for doing their jobs but also for general well-being and happiness. In that sense, it cannot be seen as a strictly “business” expense.
It may be possible to bring down your tax bill by bringing your spouse into the business if the spouse is otherwise earning little or no income. However, you will need to pay them market wages for a specific job, as you would for any other employee.
If the clothing in question is a work-specific uniform, such as a shirt with the business logo on it or any protective gear, you may be able to claim it as a business expense. However, regular clothes you wear to work are not work-specific and thus cannot be claimed.