This page looks at driving instructor support if your income has ben affected by COVID-19. The outbreak of Coronavirus has affected all driving instructors so here’s what you need to know.
I’m going to look at some important points including:
- What you’ll be paid (it’s not 80% of your monthly income)
- How to defer car leasing payments
- ADI tests
- What it means for newly qualified instructors and those training
You can click on those links above to be taken to that part of this page.
The info here applies to other self employed workers too but I have written it specifically for driving instructors.
I am not a qualified financial advisor and none of this is legal or financial advice. I have been a driving instructor for 20 years and I’m just doing my bit to help as best I can.
Driving instructor support for those affected by COVID-19
In March 2020 the government announced they would be paying self-employed people 80% of their monthly profits for at least 3 months.
There is some misunderstanding and confusion over this though. You will not be paid 80% of your income or earnings; it’s 80% of your monthly profit.
I have checked this with my accountant and he confirmed I am correct.
If you’re like me you spent a long time trying to work out what these “profits” were. Is it gross profit? Net profit? What even is a monthly profit?
It’s not easy to understand so let me explain.
What driving instructors will be paid in Coronavirus support
The government will offer driving instructor support by paying us 80% of your monthly profits.
That means the amount you earn each month AFTER your expenses. Here’s an example to make it easier to understand.
You normally earn £2,500 a month and your car, fuel etc. come to £700 leaving you with £1,800.
You’ll get 80% of the £1,800 not of the £2,500.
You won’t be paid anything for the amount you spend on your car, franchise, insurance etc. You’ll need to pay that out of the money the government gives you.
For some instructors that will be fine but for others, it will be tricky. If you’re used to earning £2,500 a month and your total monthly bills come to £2,400 then you can look into claiming universal credit or delaying your car payments.
How the 80% is worked out
The amount you are paid is an average of your last 3 years of tax returns. If you have less than 3 years of accounts they will use whatever you have.
Your 3 years profits will be added up then divided by 3 to get an average annual amount. That figure will be divided by 12 to get a monthly amount. That figure will be multiplied by 3 to get the amount you’re paid.
Here’s an example:
Your profit for the last 3 years was £18,000, £16,500 and £19,000.
That adds up to £53,500.
Divide that by 3 to give an average annual profit of £17,833.
Divide that by 12 for an average monthly profit of £1,486.
Times that by 3 and your average 3 months profit is £4,458.
That makes the 80% profit payment you get in early June to be £3,566
The scheme may be extended if the lockdown continues.
Do you have to pay the grant back?
No, the driving instructor support payment does not have to be paid back.
We will all end up paying it back through tax.
The chancellor hinted that taxes will rise for the self employed due to us being given this support and that could mean three interesting things. This is all speculation but this is what I’ve read.
The self employed could no longer be able to get expenses tax free. That means we’d pay tax on everything we earn so forget about claiming 80% of your car expenses: we’d just pay tax on everything. That could easily add £1,000 to our annual tax bill.
It sounds awful but there would be an upside to this; we could all declare a much higher income when buying a house! This is because at the moment we can only use the figure after expenses as our income.
You may earn £25,000 in a year but after expenses your income to be multiplied for a mortgage has been reduced to £15,000 or so. With the new scheme we could use the whole £25,000 as our income giving us access to more lending.
At last a driving instructor could afford to buy more than a starter home! It’s ok for those of you that bought years ago when prices were low. In 2017 I struggled to afford anything as a driving instructor looking to buy a home.
We’d also have to get sick pay and holiday pay to fall in line with the employed. That would only be fair as is we’re paying the same level of tax we must have the same level of support.
None of those things are confirmed and I can’t see them happening but who would have thought this lockdown would have happened?
Not all instructors will get support
You must have filed a tax return for the tax year ending 2019 to be eligible for support. Check if you qualify for the scheme.
If you became a driving instructor recently and have not yet filed a tax return then you will get nothing from this scheme.
I know this is a really tough time for those of you in that position. As I said, I am not a financial advisor but if you can claim universal credit or delay payments of your main bills then those are your best options.
Sadly you people have become an instructor at a tricky time but there is hope. When the restrictions lift there is likely to be a huge surge in the number of people taking lessons and tests. We’ll all be rushed off our feet and your ADI tests will resume.
We will get through this because that’s human nature. Don’t give up and stay positive! There is always a solution to any problem.
When will we get the money?
The scheme starts operating on May 13th 2020. You will get a date issued to you then and will be able to log in and complete a form from that date.
You will be told immediately if you qualify and payments will then be made within 6 days.
Car leasing payments during COVID-19
Hitachi Capital driving instructor solutions, one of the largest car hire companies for driving instructors, is offering a 3 month payment holiday.
CA cars are reducing payments to just £50 a month.
If you are renting from any other company then I recommend contacting them by email or looking on their website for details. Let me know the details so I can add them on here to help more instructors.
Paying your driving school franchise during COVID-19
It is up to each driving school to decide what action they are taking during these times.
Some driving schools are suspending franchsie payments if your income has dropped due to Coronavirus. Other schools are reducing payments to a low level such as £50 a week.
You’ll need to check with your school but I like to think they will do the right thing and help you out during these times. If they don’t then remember that when this is over!
ADI part 1, 2 and 3 tests and Coronavirus
You can’t book an ADI driving test at the moment as I write this on April 28th 2020.
If you already had a test booked they will contact you with a new test date as soon as they are available.
What if your ADI part 1 runs out soon? There is no official news but the DVSA say there is a legal reason why they can’t extend the date on learner theory certificates.
I would think this is the same for ADI part 1 but there are no firm details yet. I will update this page as soon as I hear anything.
At the moment the main concern is with providing driving tests and lessons to key workers.
Many new instructors are in a bad spot due to having left work to start as an instructor just as COVID-19 happened.
There are some great ADI forums out there which you can join and chat to others in the same position or you can subscribe for free to the 1stDrive YouTube channel to chat to others in the comments sections of my videos.
You can check out the many pages on my site by using the “Instructors” tab from the menu.
More driving instructor support
For more help be sure to check my blog regularly because I’m posting there every day or two at the moment whether that’s new pages or updating the current ones.
Be sure to join the friendly and fun 1stDrive YouTube channel to chat to learners, instructors and even me!
We’ll get through this and things will return to normal. Well not really because they’re going to be better than what normal.
I think the new normal will be a world full of people realising what they have and not taking things for granted. We’ll all appreciate things more and it’ll be better than ever.
Until then just hold tight and remember that it’s always darkest before dawn.