The Essential Guide to Allowable Expenses for UK Driving Instructors

Introduction

If you’re a driving instructor running your own business, you’ll already know how tight margins can be. Between fuel, insurance, and the steady cost of keeping your vehicle on the road, every penny matters.

At CCM | Carter Collins & Myer, we work with hundreds of sole traders across Greater Manchester, Cheshire, and Lancashire, including many Approved Driving Instructors (ADIs). This guide walks you through what you can and can’t claim – in plain English – so you can keep more of what you earn while staying firmly on the right side of HMRC.

The Golden Rule: “Wholly and Exclusively”

HMRC’s test for any business expense is simple in theory but often tricky in practice:

The expense must be wholly and exclusively for business purposes.

That means it must relate directly to your work as a driving instructor. Anything with personal use – fuel for family trips, your home internet, or mobile phone bills – must be split between business and private use with reasonable evidence.

1. Working From Home

Even if your “office” is your car, most instructors still handle admin, marketing, and lesson bookings from home.

You can claim part of your household running costs, including:

• Heating and lighting
• Mortgage interest or rent
• Council tax
• Home insurance
• Internet and phone use

There are two main ways to do this:

The Apportionment Method

Work out what proportion of your home you use for business and for how long. For example:

One room out of six, used seven hours a day for business = 1/6 × 7/9 of total household costs.

If your annual household bills are £5,660, that works out to roughly £726 claimable.

The Simplified (Flat Rate) Method

HMRC’s “lazy” option lets you claim a set monthly amount:

• £10/month for 25–50 hours
• £18/month for 51–100 hours
• £26/month for 101+ hours

If you only do admin in short bursts, this may be easier, but for instructors who spend regular time on lesson planning and bookkeeping, the apportionment method often saves more.

2. Telephone and Broadband

If you use your home phone or broadband to contact pupils or manage bookings, you can claim a proportion of those costs.

Keep a brief usage log every couple of months to show the split between business and personal use. Alternatively, consider using a low-cost VOIP (internet phone) line that’s used solely for business – much simpler for record-keeping.

3. Car and Motoring Expenses

Your car is your business – literally. But it’s also one of the most complex areas for tax relief.

You can choose between two approaches:

Option A: Mileage Allowance

If your business turnover is under the VAT threshold, you can use HMRC’s fixed mileage rate:

• 45p per mile for the first 10,000 business miles
• 25p per mile thereafter

You’ll need to keep an accurate log of business journeys (to and from pupils, test centres, etc.). Travel from your home to your first lesson, and from your last pupil home again, counts as business mileage if you work from home.

Option B: Actual Running Costs

If your car is used almost entirely for lessons, claiming actual costs may be more accurate – and often more generous. This includes:

• Fuel
• Servicing, tyres, valeting
• Dual-control installation and maintenance
• Car washes, oil, and breakdown cover
• Insurance and road tax

Keep receipts and track any personal mileage.

Tip: Cars fitted with dual controls are treated by HMRC as plant and machinery, not normal cars. That means you can claim capital allowances on the purchase cost – an often-overlooked benefit for driving instructors.

4. Advertising and Promotion

You can claim for any legitimate marketing that helps you attract new pupils, such as:

• Website hosting and renewal fees
• Online ads (Google, Facebook, etc.)
• Flyers, business cards, or vehicle signage

Be careful: costs that blend business and personal entertainment – for example, taking clients out socially – aren’t allowable.

If you’ve paid for a new website build, that’s treated as a capital expense (a long-term investment). The ongoing costs of hosting and maintaining it, however, are fully deductible.

5. Training and CPD

Not all training is treated equally. HMRC’s rule is this:

• Training to learn new skills (e.g., qualifying as an instructor) is not deductible.
• Training to update existing skills (e.g., refresher ADI courses or advanced driving updates) is.

If you’re taking ongoing CPD or attending seminars relevant to instructing, keep invoices and course details to justify the expense.

6. Insurance and Professional Fees

All the following are legitimate business costs:

• Public liability or professional indemnity insurance
• Vehicle insurance for your dual-control car
• Business contents or equipment insurance
• Professional body memberships (e.g. DIA, MSA, RoSPA)
• Accountancy or bookkeeping fees
• Legal fees for contracts or disputes

Even your accountant’s fees are deductible – so hiring a good one genuinely pays for itself.

7. Networking and Subscriptions

The cost of attending local business groups or instructor meetups can be claimed as long as the primary purpose is business-related.

Industry magazines and professional journals are also allowable, as are small-scale online subscriptions related to driver training or business development.

8. Vehicle Leasing

If you lease your car rather than buy it outright, the rules get a bit more technical. The tax treatment depends on whether the lease is a contract hire or a finance lease, and whether there’s an option to buy the vehicle at the end.

In some cases, the lease payments are fully deductible; in others, you can only claim the finance interest and depreciation. It’s one area where professional advice is well worth the cost.

9. Fixed Assets and Equipment

Driving instructors often need durable equipment that lasts for years – computers, dashcams, tablets, signage, or dual controls. These are treated as capital items.

Most can be claimed in full under the Annual Investment Allowance (AIA), currently set at £1 million.

Example: You buy a new £2,000 dual-control system – you can usually claim 100% of that in the year of purchase.

Smaller purchases (like staplers, small tools, or calculators) can simply be treated as normal expenses if they’re low value – many firms set a £100 threshold for this.

10. Capital Allowances for Cars and “When a Car Isn’t a Car”

If you own your vehicle, you can claim capital allowances to spread the cost over time.

But here’s the key point: for driving instructors, dual-control vehicles are classed as plant and machinery – not cars.

That distinction matters because it allows you to use your Annual Investment Allowance to claim the full cost immediately, rather than spreading it over several years.

Keeping Good Records

No matter which expenses you claim, record-keeping is everything. Keep:

• Receipts or invoices for all purchases
• Mileage logs and lesson records
• Bank and card statements
• Notes on how you’ve calculated business-use percentages

Digital records are fine – and increasingly essential as Making Tax Digital for Income Tax rolls out in April 2026.

Common Mistakes to Avoid

1. Claiming private costs – HMRC takes a dim view of inflated claims.
2. Forgetting the small stuff – parking, car washes, tolls, and stationery all add up.
3. Ignoring capital allowances – your car might qualify for 100% relief.
4. Mixing business and personal banking – use a separate account to simplify your bookkeeping.

The Bottom Line

Claiming allowable expenses isn’t about “beating the system” – it’s about paying the right tax on your real profit. Done properly, it can save you hundreds (and sometimes thousands) of pounds a year.

For driving instructors across Greater Manchester, Cheshire, and Lancashire, every bit of efficiency counts – especially with rising fuel and insurance costs.

At CCM | Carter Collins & Myer, we specialise in helping driving instructors run smarter, leaner, and more profitable businesses.

Call to Action

If you’re unsure what you can claim – or whether you’re already leaving money on the table – get in touch with CCM for clear, practical guidance.

Book a free 15-minute clarity call at www.uk-ccm.com or email enquiries@uk-ccm.com to get started.

Because keeping your business on the road shouldn’t mean running it on fumes.