As part of our ongoing series tackling accounting issues in specific sectors, this week we look at the problems faced by driving instructors.
Self-Employment
Most driving instructors are self-employed. I have written about self-employment in general here. This blog picks up on specifics that driving instructors might need to know in addition.
Turnover
A driving instructor’s primary source of income is lesson payments from pupils. There may be a few other sources, such as payment for covering another instructor, or payment from a pupil for a test that you have paid for on their behalf. All of these should be classed as sales.
If for some reason you don’t perform a lesson - for example, the pupil is refunded, or another tutor covers the lesson - these are classed as negative sales. They will reduce the total income declared on your tax return, and therefore reduce your tax bill.
Expenses
The general rule is simple - If a cost is wholly and exclusively for business, it’s allowable. If it’s partly business‑related, you may be able to claim a proportion.
Here are the most common questions driving instructors ask:
Food and Drink
HMRC considers this a personal cost, and so it's ot claimable in normal circumstances. You can only claim meals if you’re doing something outside your normal working pattern, such as attending training or a conference.
Clothing
HMRC assumes you’re not going to turn up to work naked, so it's also not claimable - unless it’s branded workwear (e.g. a polo shirt with your business name). HMRC treats branded clothing as advertising.
Your Car
The biggest expense for any driving instructor is likely to be their car. You can claim:
- Fuel or electricity.
- Insurance.
- Repairs.
- Other running costs.
If the car is used solely for lessons, you can claim 100% of these costs. If it’s used for both business and personal purposes, you’ll need to estimate a reasonable business percentage.
Franchise Fees
If you're a driving instructor working as part of a franchise, certain franchise fees qualify as a deductible expense.
Costs Paid on Behalf of Pupils
Test fees, study materials, and similar costs are all deductible.
Training
Initial training to become an instructor is not allowable (HMRC treats this as learning a new trade).
However, ongoing training and CPD after qualification is allowable.
Working From Home
Most instructors do some admin at home - booking lessons, planning routes, doing accounts.
If you work more than 25 hours per month from home, you can use HMRC’s simplified home‑working allowance. You can also claim a reasonable business percentage of:
- Broadband.
- Mobile phone costs.
These don’t need to be calculated scientifically - just make sure your estimate is realistic.
Drawings
It is important to note that anything you pay yourself cannot be deducted before tax is calculated. Anything you take for personal usage is effectively drawings and should be classed as such.
Expenses Prior to Starting as a Driving Instructor
Any costs that you incur to get set up to be a driving instructor will be claimable in your first tax return if they would have been claimable after you began teaching. It may be that these need to be added manually to your data, so it is best to keep a list that you can provide as back up.
Car Purchases
Generally, if you purchase a car as a business asset, you are only able to claim a portion of that as a tax-deductible expense. This could be 18% per year if emissions are over a certain level, or 6% if they are under. Fully electric cars can be claimed as a deductible expense, in full, in the year of purchase.
If a car is fitted with dual controls, driving instructors can claim 100% of the cost in the year of purchase. There is case law stretching back 60 years allowing this, even though it is not mentioned explicitly on HMRC’s guidance on business vehicles.
If you claim 100% of the car in the year of purchase, you will need to be aware that as and when you dispose of a car, the sales price effectively becomes taxable - you can only claim a tax deduction on the actual amount you spent on the car.
To clarify, if you buy a car for £20,000 but sell it 3 years later for £8,000, the total cost to your business is £12,000. The remaining £8,000 is subject to a claw back from HMRC.
In practice, this may not affect you too much if you remain as a driving instructor. The car you sell for £8,000 may be replaced by a car that costs £25,000. Claiming a tax deduction of £25,000, minus the claw back of £8,000, means you effectively claim a deduction of £17,000 on your new vehicle.
The claw back will therefore only become an issue when you cease teaching.
Software
I recommend using software for almost all clients who are self-employed. For driving instructors, there are a lot of incomings and outgoings – especially with multiple receipts from students and petrol spend each month. Software allows you to easily sort this when reconciling your bank account making it much quicker to process your data for your tax return. There are other benefits to using software, which I elaborate on here.
Banking
With any self-employed business it's a good idea to get a separate bank account for your business incomings and outgoings. You can then withdraw money into a personal account to spend on non-business items. This allows for all your data to be much cleaner, and it will help you or your accountant identify business related transactions much more easily.
Deadlines and Taxes
Your tax return will need to be completed by the 31st of January each year. Your tax bill will also be due on this date, although it is likely that you will need to make payments on account towards the following year’s bill.
Any questions about anything here, or anything that I didn’t mention, feel free to get in touch.
All figures correct as of 8 October 2025.
