Self employment is the most tax efficient way to be paid as an instructor.

These are the costs associated with being on the payroll:

1. Employers’  National Insurance, currently running at 12.8% and is paid by the employer on your earnings and company car.
2. VAT would have to be charged on driving lessons which would make them 15% more expensive.
3. You will pay company car tax.
4. The instructor cannot offset as much against tax as they would if they where self employed.

Either 30% more would need to be charged for a  driving lesson or the instructor would need to be paid almost 30% less then the equivalent self employed driving instructor.

Is it any wonder that almost all driving schools including BSM and the AA work on a self employed franchise basis?

This is what can be offset against tax as a self employed driving instructor:

1. All car costs ie fuel, cleaning, maintenance, leasing or finance costs.
2. Franchise costs. If you don’t have a franchise then advertising, web sites and the cost of paying someone to answer the ‘phone.
3. Mobile ‘phone and 50% of reasonable land line costs.
4. Broadband and computer equipment.
5. Start up costs (training).
6. A proportion of your council tax, water rates, electricity, gas and rent.
7. Stationary, pens, paper, books.
8. Anything you can reasonably associate with your job as a driving instructor.

 You are probably paying for most of these items having already paid tax on your wages. This means you could actually afford to earn less as a driving instructor but in real terms you would actually be earning more because you are paying less tax.

Is it any wonder that driving instructors pay very little tax compared to the average employed person?