If you thought that to become a driving instructor, you’d just have to pass your ADI training, pay for your badge, and hire a dual control tuition vehicle is all you need to become an independent driving instructor, you’d be way off the mark. You have to consider your operational costs when it comes to driving tuition vehicles.
Buying your car outright is going to require you to first select a car that’s cost efficient so that it doesn’t eat into your overheads on fuel costs. Therefore, a 3-litre sports car is definitely out the equation.
Even if you choose to buy an economical vehicle, you’re then going to have the modification costs to have your dual controls fitted. This is one of the reasons that driving instructors will opt for car leasing, as opposed to buying the car outright.
There’s more benefits to leasing a car for training purposes, than the mere repair costs.
Those costs to repair a vehicle can soon add up over the course of a year. When you consider that your mileage is likely to exceed 30’000 miles per year, you can soon understand that your tyres are going to wear thin more frequently.
Then there’s the issue of inexperienced drivers, learning to drive and perhaps being too heavy on the brakes, leaving you in need for new brake pads and shoes on a regular basis. Leasing a car with a reputable organisation, gives you the option of having your car serviced more frequently than a personal vehicle would, as it’s going to be used for business purposes.
The rates are going to be higher due to the increased wear and tear of the vehicle.
This is the more important part of car leasing, and it’s something that without an accountant you may not know about, and that could prove costly on your self-assessment form. When you buy a vehicle outright, you’re the owner of that vehicle.
Therefore, when it comes around to the HMRC*, the direct assumption is that you’ll be using the car for some personal usage, therefore, claiming back the VAT on the price of the vehicle can be a tremendous nightmare, as you have to prove it’s solely for business purposes.
Using the option of leasing your vehicle allows you to claim not the whole 20% VAT of your lease costs, but it will allow you 50% VAT exemption. The difference with leasing a vehicle is that the tax office understands that there is going to be some form of personal use, but it’s also an operational cost for your line of work. Therefore, the HMRC will split the difference with you, allowing you a 50% VAT exemption, which you can reclaim through your self-assessment.
When you’re leasing a driving instructor vehicle, you’ll be dealing with a specialist firm. They will give you quotes inclusive of VAT, as they know it’s obviously for business purposes. Rates exclusive of that are more for personal use, which obviously if it’s for your own personal use, you’re not going to require dual controls and a roof sign on the vehicle, and probably not regular servicing either.
If you find it difficult to obtain HP for your tuition vehicle, what you can also do as an alternative is approach larger driving schools with fleets, and seek work as a self-employed instructor with their company. Larger driving schools will have agreements with suppliers giving them discounted rates based on the volume of vehicles. Those are sometimes paid for by the organisation, but there are other times, where the driving school may charge the lower rate to their instructors, to give them a head start into their new career. It’s something that may be worth looking into in your early days as a driving instructor.
*Disclaimer to the aforementioned VAT information Please note that we aren’t specialists in the finance sector, therefore we would advise you that all information is based on internet research. Please seek independent financial advice from a qualified professional, who can guarantee solid financial advice. The information provided here is based on research and intended for informational purposes only.