Our expertise

Accountants for Driving Instructors in York

Software Training VAT Bookkeeping Two People Meeting 3

There’s a lot going on in the finances of a driving instructor’s business that won’t necessarily show up in the annual accounts. Take car expenses for example, where the rules for a mixed-use vehicle are more specific than most people realise. Then there’s franchise fees, which need recording consistently through the year rather than reconstructed at the end of it. There’s the ADI licence and any CPD costs, which are allowable but easy to leave off a return. And VAT-exempt status shapes the numbers in a way that’s worth understanding from day one.

We work with driving instructors across York, Yorkshire and the UK: from sole-trader ADIs teaching in their own car right through to driving school owners running a team of franchised instructors. We understand how mixed-use vehicle costs and franchise fee structures actually work in this sector, and we make sure your records and your tax reflect that.

In a nutshell: we’ll handle your annual accounts and tax, work out whether mileage rates or actual costs suit your car better, record your franchise fees correctly through the year, claim your ADI licence and CPD costs, and get you set up for Making Tax Digital for Income Tax in good time. Fixed fee, agreed upfront. Plain English at every step.

Why driving instructors need a specialist accountant

A generalist accountant can file a tax return. Where driving instructors catch them out is in the specific rules around the main business asset, the car, and in the VAT position that applies to this sector.

Car expenses need working out on the right basis. Unlike a van, a car used partly for personal journeys can’t be claimed at a flat business rate. HMRC disallows a simple full claim on a mixed-use car. Instead, instructors have two options: the approved mileage rates (45p per mile for the first 10,000 miles, 25p after that), or the actual costs method, where you work out the business proportion of all running costs including insurance, servicing and depreciation. Which method saves you more depends on your mileage and your actual costs. We look at both and apply the one that’s right for your situation.

Franchise fees need recording through the year, not just at year-end. Many instructors pay weekly or monthly fees to a franchise: BSM, AA Driving School, RED and others all operate on this model. These fees are fully allowable as a business expense, but they need to be recorded consistently as they go out. Letting them pile up and trying to reconstruct the year from bank statements is slower and more error-prone than keeping the records current. We handle this as part of the bookkeeping, so the figure is always accurate.

ADI licence and CPD costs are allowable, but they need to be claimed. The cost of maintaining your ADI licence and any ongoing training or continuing professional development is a legitimate business expense. These amounts are often modest individually, but they add up across a year and belong on your tax return. We make sure nothing allowable gets left off.

VAT-exempt status needs to be understood from the start. Driving instruction is generally VAT-exempt, which means two things: you can’t charge VAT to your pupils, and you can’t reclaim the VAT you pay on your own purchases (fuel, servicing, new equipment). This is a fixed feature of the sector, not a disadvantage exactly, but something that shapes the numbers. Getting this right from the start avoids the confusion of registering unnecessarily or trying to reclaim input VAT you’re not entitled to. Some driving instruction is VATable, so it is important to understand the rules from the start.

Making Tax Digital for Income Tax is now live for higher-earning sole traders. If your qualifying income (self-employment income plus any rental income) was above £50,000 in the 2024 to 2025 tax year, you should already be filing quarterly digital updates with HMRC under Making Tax Digital for Income Tax instead of one annual Self Assessment, a change that took effect from 6 April 2026. The threshold drops to £30,000 from April 2027, which will bring a good number more driving instructors into scope. We set up the right software, handle the quarterly submissions, and get anyone approaching either threshold ready well before their turn comes.

Here’s how we help

The services driving instructors call on most, each with the full detail on its own page:

This page talks about why having a specialist is important. The individual service pages show how each bit of the work gets done.

How we work with driving instructors

No two driving instructors need exactly the same mix of services. A sole-trader ADI with a straightforward year is a different job to a driving school owner with several franchised instructors and a mixed employed and self-employed team. We’ll tailor what we handle to where you are now, and adjust it as things change.

Staying in regular contact through the year keeps things tidy. Whether that’s a question about a new vehicle, a change to how you’re operating (franchise to independent, or sole trader to limited company), or working out which expenses method to use for the year ahead, you’ll have someone to ask. If HMRC writes to you about anything, forward it on and we’ll either explain it or tell you to ignore it.

Records come through ShareFile, and we work with Xero, FreeAgent and Dext for clients on cloud bookkeeping. Keeping your mileage and fuel records current through the year means the car expenses calculation at year-end is a formality, not a reconstruction job.

The year-end meeting is where we’re most useful. We’ll go through the mileage-versus-actual-costs comparison for the year, check your franchise fees and licence costs are all captured, and talk through anything that’s changed, a new vehicle, a move from franchise to independent, or taking on your first employee. We’ll also flag whether Making Tax Digital applies to you yet, and what the next threshold means for your timing.

If you’re already working with another accountant, moving over is more straightforward than most people expect, and our guide on how to change accountants walks you through it.

Fixed fees, no surprises

You’ll know what you’re paying before we start, and the fee doesn’t change unless the work does. A sole-trader instructor with a straightforward year is a different job to a driving school with a handful of employees and a mixed employed and self-employed structure, so the right number for you comes from a short conversation, not a price list.

Ask for a fixed fee for your driving instruction business

A couple of minutes on our online form, and we’ll come back to you as soon as we can.

Frequently asked questions

Can I claim my car as a business expense?

Yes, but the rules depend on how you use it. If the car is used exclusively for business (which is rare, given you have to drive it home), you can claim the full costs. More commonly, instructors use the car for personal journeys too, which means you need to use either the approved mileage rates or an apportioned actual costs calculation. HMRC disallows a flat claim on a mixed-use car. We look at both methods and apply whichever gives you the better outcome for your situation.

Are my franchise fees tax-deductible?

Yes. Fees paid to a driving school franchise are an allowable business expense, whether they’re charged weekly or monthly. They need to be recorded correctly as they’re paid so that your annual accounts and tax return reflect the full cost. We include this as part of the bookkeeping, rather than trying to piece it together at year-end.

Do I need to register for VAT?

Almost certainly not, and possibly not ever. Driving instruction is VAT-exempt, which means your income doesn’t count toward the VAT registration threshold. The trade-off is that you can’t reclaim input VAT on your purchases either. There’s no benefit to registering voluntarily in this sector, and registering unnecessarily creates compliance obligations you don’t need. We confirm the position clearly when we start working together.

What is Making Tax Digital for Income Tax, and does it affect me?

Making Tax Digital for Income Tax requires sole traders with qualifying income above £50,000 to submit quarterly digital updates to HMRC, a change that took effect from April 2026. The threshold drops to £30,000 from April 2027, which will bring more driving instructors into scope. If your income is approaching either level, or you have rental income alongside your driving instruction, you may already be affected. We assess your position and get the right software in place in good time.

Should I stay as a sole trader or set up a limited company?

For most driving instructors, sole trader is the right structure: it’s simpler to run, the compliance costs are lower, and the tax position is similar until profits rise into a range where a limited company becomes materially more efficient. If you’re running a school with employees and turnover well above the basic rate band, the conversation is worth having properly. We run the numbers for your situation before you commit either way.

We work with driving instructors across Yorkshire and the UK. The first conversation is about your business: what you do, how you work, and what you’d like an accountant to take off your plate.

Why clients stay with us

We’ve been working with driving instructors across Yorkshire since Stacey McVeighty FCCA started the practice in 2014. Today we look after around 800 clients from our York office. We’re ACCA-accredited, and we hold 38 five-star reviews on Google, rated 5.0, most from clients who’ve been with us for years.

Fixed fees. Plain English. The same team next year, and the year after that.

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