How much tax should a driving instructor set aside? Tax and allowable expenses for 2025/26
A driving instructor's costs are dominated by two things: the car and, if you're with a franchise, the weekly fee. Both are claimable, but they follow different rules.
What the tax looks like
Using the 2025/26 rates (England, Wales or Northern Ireland, no other income), a driving instructor with £40,000 of takings and £11,000 of allowable costs has £29,000 of profit and about £4,272 of income tax and Class 4 National Insurance for the year, roughly £356 a month. The figures are an illustration, not an average for the trade. Tax is on profit, not takings.
| Profit for the year | Income tax + Class 4 NI | Per month | Per £1 of profit |
|---|---|---|---|
| £17,000 | £1,151.80 | £96 | 7p |
| £29,000 | £4,271.80 | £356 | 15p |
| £44,000 | £8,171.80 | £681 | 19p |
Open the calculator already filled in with this example and change the two numbers to yours. It also shows the January and July payment dates.
Costs a driving instructor usually claims
Claim only what you actually spent on the business, and only the business share of anything you also use personally.
- Franchise or licence fees paid weekly or monthly to a driving school.
- Dual controls and car signs, plus their fitting and servicing.
- Car running costs: fuel, insurance, MOT, servicing, or the flat mileage rate.
- Business insurance for tuition, which is usually separate from a normal policy.
- Qualification and renewal fees to stay registered, and training that keeps your skills current.
- Advertising: leaflets, website, listing fees.
The general list is on GOV.UK: self-employed expenses you can claim, and what you can't. If your costs for the year are under £1,000, the trading allowance may leave you less tax.
Car costs or the flat rate
Teaching lessons is business mileage, and for cars GOV.UK's simplified rate is 45p a mile for the first 10,000 miles before 6 April 2026, 55p for the first 10,000 from that date, and 25p a mile after. Pick that or actual running costs for the car, not both. The flat rate is simple if the car is also used privately, because there's no need to split fuel and insurance between personal and tuition use, but you need a log of every lesson mile. If the car is used only for tuition, actual costs can come out higher. The mileage allowance calculator compares both for your year.
VAT
The VAT threshold is £90,000 of taxable turnover over 12 months. Check GOV.UK for how it applies to your own set-up.
Records worth keeping
- Log the miles each day: the first pickup to the last drop-off, plus journeys between pupils.
- Keep the franchise statements. Fees can change mid-year and need to match the invoices.
- Record lesson income by pupil or by week. Pupils paying in blocks make cash timing look different from earnings.
- Note the date you started using the car for tuition, since that's when its business use starts.
Made for instructors: pupil hours, franchise fees and car costs in the return's boxes: the Driving Instructor Accounts Spreadsheet UK is a one-off £4.99 download for Excel and Google Sheets. It is a spreadsheet only: nothing here files anything with HMRC, and the sheet doesn't replace an accountant if your case is complicated.
Dates matter too: the 2025/26 return and tax are due on 31 January 2027, and payments on account can make that January bigger than the year's bill.
This is a planning guide, not tax advice. Figures worked with the calculator's 2025/26 rules, and GOV.UK sources read on 21 October 2026: Expenses if you're self-employed, Simplified expenses: vehicles, When to register for VAT.
Try the calculator with this example