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#1 03-12-09 17:31:39

triplea35
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PDI - Any tax considerations?

Hi
1) I am currently applying to be a PDI and am planning on going the independent route.
I am currently in need of a new car whether or not I continue with the training, but will choose a suitable car for instruction purposes. I am not desperate but it will have to be sooner rather than later
Although obviously at an early stage what has sprung to mind is there anything I should be considering in relation to tax benefits, ie is there a 'best' time to purchase a car.
2)Do you generally become 'self employed' and/or set yourselfs up as a company.
I have found the HMRC site and enrolled for a couple of presentations on the subjects but they are a few months off. I appreciate at some point I will have to engage an accountant but it seems too early yet as the prospect of generating any income from instruction is a long way off.
3)Whilst trawling the net recently I came across a site, something on the lines of an instructors association that had links to registering with certain manufacturers 'affinities' programnes for ADI's but can no longer find it. Anyone got an idea which site it was.
Thanks for your help in anticipation.     

03-12-09 17:31:39

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Re: PDI - Any tax considerations?




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#2 03-12-09 20:59:34

sue martin
Verified Member
From: National area franchises
Registered: 21-01-05
Posts: 333
Website

Re: PDI - Any tax considerations?

Hi
l will try to answer your questions.
1) firstly just wanted to clarify your meaning of 'independent' in relation to applying for your PDI licence. To receive a PDI licence you will need a sponsoring driving school or ADI who's name you will teach under, some schools insist you use their cars to teach in, others are happy for you to provide your own. Their is no specific 'best time' to purchase a car as all tax benefits are based pro rata, some cars mean you can claim 100% Capital write-down relief initially however this does mean you will have a hefty tax bill to offset this when you sell the car on so again don't be fooled too much by greater capital write down figures.
2) The vast majority of instructors are self employed sole traders, if you have a school you may go the partnership or ltd company route but if not needed its not advisable as their are extra costs involved in running such. All you need to do is phone the self employment helpline and register and the HMRC swing into action sending you brochures giving info on self employment and registering you for N.I. and setting in motion your tax returns to be sent at the appropriate times.
3) Their are a number of different "programmes' offered to instructors, nearly all manufacturers will offer an incentive package for driving instructors, contact local associations, D.I.A. or forums for a list of the current offers from each manufacturer however as a word of caution the best way of saving money is not to buy new in the first place, resale values plummet in the first year and that money has to be accounted for somehow, buy 2nd hand, pre reg. etc and you will lose less of the value and end up with more money in your pocket.
Hope that helps
Sue


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#3 03-12-09 23:10:47

triplea35
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Re: PDI - Any tax considerations?

Hi Sue
Thanks for the reply.
By 'independent' I meant I would seek out my own trainer for training for Part 2 & 3, paying hourly etc rather than some complete package deal from a national school. When qualified I would be self employed and using my own vehicle. I was not planning to take a trainee licence out. Have I caused confusion by referring to myself as a PDI?- I thought thats what you are when going through the process of qualifying and the trainee licence is an option but not a necessity. Hope I'm not mistaken or its back to Plan A!! smile
I appreciate your comments re better value buying pre reg etc and will take it on board. My current car was a pre reg  with 3 miles on the clock and with a great saving but recently the few pre reg/nearly news I have seen have not been particularly well discounted from the new price. I had a test drive of a Mazda2 today and was impressed but refrained from signing on the dotted line. Maybe hold of until after Xmas but then if I am still leaning towards new will have to consider waiting until March for the 10 plate. Mr Decisive I am NOT!!!
Thanks again
Adrian   

#4 03-12-09 23:23:41

reddragonbus
Verified Member
From: Edinburgh
Registered: 05-02-06
Posts: 1,653

Re: PDI - Any tax considerations?

I would hold off buying a new car until you have qualified.


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#5 04-12-09 17:17:41

kaf
Verified Member
From: Wiltshire
Registered: 05-08-07
Posts: 3,325
Website

Re: PDI - Any tax considerations?

If you buy a car before you qualify you will have a difficult tax position. As you are not qualified, you cannot be in business, therefore any car you buy cannot be for business use.

So if you buy a car before you set up business you would seem to have to either go down the route of claiming for mileage (40p for for first 10,000 , miles 25 p for the rest) or transfer the car to the business when you set up, this would be at market value of the car, so you would be eating the first few months depreciation yourself.

I agree with reddragonbus, put off buying the car until you qualify, if you want part 3 practice get duals for your current car.

If you really want a new car then great, but buy it on the understanding that it will be a family car, not with a view to the business, which might never happen, remember only 7% of those who register as a PDI actually qualify.

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#6 05-12-09 05:54:00

triplea35
Guest

Re: PDI - Any tax considerations?

Hi
Thanks again for the replies. Kaf, in particular, your reply answered the concerns I was trying to raise. Looks like I may try and hold off a bit longer with the new car purchase.
I am certainly going into this 'eyes open' with no delusions that I am guaranteed success in either qualifying or making a living from it.
In purchasing a new car it would be  as a replacement for the family car and in considering a vehicle suitable for instruction would actually be 'downsizing' which probably  also fits our current family circumstances and is not a bad thing in the current economic climate.
Have a few (well a lot!) of other questions but will put them on other threads so as not to go too off topic.
Thanks again for all the replies.


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#7 23-12-09 07:07:52

RobC
Verified Member
From: Nr Ormskirk Lancs
Registered: 28-01-09
Posts: 765
Website

Re: PDI - Any tax considerations?

If you buy a car before you qualify you will have a difficult tax position. As you are not qualified, you cannot be in business, therefore any car you buy cannot be for business use.

So if you buy a car before you set up business you would seem to have to either go down the route of claiming for mileage (40p for for first 10,000 , miles 25 p for the rest) or transfer the car to the business when you set up, this would be at market value of the car, so you would be eating the first few months depreciation yourself.

I agree with reddragonbus, put off buying the car until you qualify, if you want part 3 practice get duals for your current car.

If you really want a new car then great, but buy it on the understanding that it will be a family car, not with a view to the business, which might never happen, remember only 7% of those who register as a PDI actually qualify.

Kaf

Surely an 'unqualified' PDI on a pink licence can be in business and therefore buy a car for business use.

Also if you were an unemployed non pink PDI nearing the end of the qualifying process, you could register as self employed and even though you haven't any income, you could offset legitimate training expenses (including a car, petrol etc) against tax you paid from any previous employment in the same tax year.

As for fitting duals to your car prior to qualifying, your car insurance is likley to be VERY expensive unless you have a pink or green licence and you will need specialist driving instructor insurance as your dual fitted car and pupils are unlikely to be insured by your existing normal car insurance policy.


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#8 23-12-09 08:01:31

nay7272
Member
Registered: 18-04-09
Posts: 58

Re: PDI - Any tax considerations?

I had duals in mine before becoming a qualified instructor,Waveney insured me and it was about the same as my normal insurance was

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#9 23-12-09 09:23:42

RobC
Verified Member
From: Nr Ormskirk Lancs
Registered: 28-01-09
Posts: 765
Website

Re: PDI - Any tax considerations?

I recently started an Instructors Insurance policy with Waveney who I found very competitive, yet changing to Driving Instructors insurance on my Mini more than doubles my premium. This is understandable as Waveney insured my Mini for any attended  learner or any unattended driver over 25 wheras my normal car insurance only covered myself and spouse.
Without a pink or green license, the premium Waveney quoted me was considerably more than double my premium.

Rob


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#10 23-12-09 09:31:02

martin_t
Verified Member
Registered: 30-12-06
Posts: 357

Re: PDI - Any tax considerations?

When I started, my insurance with Waveney was almost 10% LESS than my standard insurance from Norwich Union (who wouldn't even quote for a vehicle fitted with dual controls).

Incidentally, NU were the most competitive at that time - previously I'd used a local broker, who hadn't been beaten on price for more than 20 years.

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#11 23-12-09 09:53:02

sue martin
Verified Member
From: National area franchises
Registered: 21-01-05
Posts: 333
Website

Re: PDI - Any tax considerations?

Hi
     The important part re. whether you can claim for things ie a car is whether you are registered as self employed or not, anything purchased before you register is not claimable , anything after whether you are on a pink licence or not can be claimed for in one way or another, insurance for most dual controlled cars is about the same as a non dual controlled car generally , some insurers will not want to quote if you are under 25 , Mid Cornwall Brokers are a good broker to try as well , have used them in preference to Waveney for many years as they have proved good when making claims in the past.
Sue


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#12 23-12-09 10:43:49

triplea35
Guest

Re: PDI - Any tax considerations?

Thnaks for the replies.
RobC you have certainly giving me info that I will need to explore further.
My position is that I have been employed this year( well technically still am until 5th jan) and have made a significant tax contribution. I will be in receipt of a reasonable pension so will still be subject to income tax from the pension in future years.
SueM, I have had a look at the HMRC site and it appears to be relevantly easy to register online as self-employed. The only consideration appears to be a liability to NI contributions for  which an exemption can be claimed for low self employed earnings. That would certainly be the case for this financial year.
So from what you are both saying I am pondering on whether it is possible to register as self employed asap and then claim for the car and training costs against this years income tax from employed PAYE deductions.
I am still at a very early stage (waiting for that darned CRB check to come back) but I think it is feasible to anticpate that I could get my Part 1 & 2 out of the way before the end of this financial year.
The HMRC site does not really give sufficient info so maybe a phone call or wait for the HMRC  self employed workshop I have booked for early Feb.


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#13 23-12-09 11:17:12

RobC
Verified Member
From: Nr Ormskirk Lancs
Registered: 28-01-09
Posts: 765
Website

Re: PDI - Any tax considerations?

I had duals in mine before becoming a qualified instructor,Waveney insured me and it was about the same as my normal insurance was

Just for the record my 57 reg Mini Cooper is £400 a year to insure with Driving Instructors Insurance, wheras I was paying £200 a year on normal car insurance for myself and wife to drive. Perhaps I'm payng too much for my Driving Instructors insurance, however £400 a year is a necessary business expense and seemed reasonable to me for the level of insurance provided


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#14 23-12-09 15:19:16

martin_t
Verified Member
Registered: 30-12-06
Posts: 357

Re: PDI - Any tax considerations?

Driving Instructors Insurance = DIA insurance, yes?

Theirs was the first quote I got.  The second was from Waveney.  DIA wasn't quite triple Waveney's.

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#15 23-12-09 16:19:52

RobC
Verified Member
From: Nr Ormskirk Lancs
Registered: 28-01-09
Posts: 765
Website

Re: PDI - Any tax considerations?

Martin

Sorry if I didnt make myself clear but I'm with Waveneys. I thought £400 a year was reasonable for a 1.6 120bhp Mini Cooper, though I appreciate that perhaps there may not be as greater difference in normal and instructor insurance premiums if I drove a 1.2 Corsa.

Rob


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#16 26-12-09 21:42:20

jlo31
Verified Member
Registered: 17-02-09
Posts: 194
Website

Re: PDI - Any tax considerations?

If you buy a car before you qualify you will have a difficult tax position. As you are not qualified, you cannot be in business, therefore any car you buy cannot be for business use.

So if you buy a car before you set up business you would seem to have to either go down the route of claiming for mileage (40p for for first 10,000 , miles 25 p for the rest) or transfer the car to the business when you set up, this would be at market value of the car, so you would be eating the first few months depreciation yourself.

I agree with reddragonbus, put off buying the car until you qualify, if you want part 3 practice get duals for your current car.

If you really want a new car then great, but buy it on the understanding that it will be a family car, not with a view to the business, which might never happen, remember only 7% of those who register as a PDI actually qualify.

Hi this thread is useful stuff.

I have recently qualified but am not starting until March. I plan to buy a NRA new car and go independent. I am still employed at the moment and will be handing in my notice.

So my question is can I buy the car say mid Feb for instructing before I register as self employed and if so do I loose out on what I can claim back on the car if I buy before registering as self employed?

Cheers

Jlo31


RoSPA Diploma in Advanced Driving Instruction
IAM Motorcycle
DSA ADI (Car)
DSA Fleet registered trainer (Grade 5)
www.PrecisionDriverTraining.co.

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#17 01-01-10 15:35:24

Hale
Verified Member
From: Reading
Registered: 26-06-05
Posts: 379
Website

Re: PDI - Any tax considerations?

If you buy a car before you qualify you will have a difficult tax position. As you are not qualified, you cannot be in business, therefore any car you buy cannot be for business use.

So if you buy a car before you set up business you would seem to have to either go down the route of claiming for mileage (40p for for first 10,000 , miles 25 p for the rest) or transfer the car to the business when you set up, this would be at market value of the car, so you would be eating the first few months depreciation yourself.

I agree with reddragonbus, put off buying the car until you qualify, if you want part 3 practice get duals for your current car.

If you really want a new car then great, but buy it on the understanding that it will be a family car, not with a view to the business, which might never happen, remember only 7% of those who register as a PDI actually qualify.

Blimey i didnt realise it was only 7%!!!

I knew the part 3 pass rate was 33%


When i say STOP, I can only mean ONE thing!

Part 1 - Passed Sept 2003
Part 2 - Passed Nov 2003
Part 3 - Failed Aug 2004
Part 3 - Passed Jan 2005

http://www.hayleys-driving-tuition.co.uk

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