Is there an accountant in the house ?

Hi All

Can anyone out there in UKRM land advise me on the following tax questions


In addition to my regular, full time PAYE main employment I am in the
process of becoming a motorcycle instructor and I understand that may
need to register as a sole trader. In my main employment I am currently
paying income tax at the higher rate of 40%. The work as a trainer
currently pays £62.50 per session and as I intend to work only weekends
gives an absolute maximum anticipated earnings of £6500. I know this
isn't a huge amount (in fact it's barely above minimum wage), and I
could easily earn more than this working weekends for my employer but,
for me this isn't all about £. However I will need to cover my costs and
don't want any nasty tax-a-grams

Once qualified, my license to instruct will tie me to a single company
i.e. I will not be able to work as a motorcycle instructor for any other
company or organisation. Does this make me an employee of the training
company or can I still be classified as a sole trader?

As an instructor, I will be using my own (fully paid for) motorcycle,
however the company I will be working with does not offer mileage or
running costs. I anticipate that I will ride approximately 25 miles per
session on public roads as an instructor plus an additional 6 miles per
session between my home address and the training centre. The anticipated
annual business mileage will be considerably below 10,000

Given this circumstance, Can I claim 40p per mile for any of this
mileage from the Inland Revenue? (My engine capacity is 1130cc)

I will not be using my motorcycle exclusively for my work as an
instructor, however time pressures will inevitably mean that the vast
majority of the time spent on my motorcycle will be related to my
instructor role. Given that, can you please advise me on the best way to
account for the following costs

Training Fee:

£150 paid in July (receipted) - The total cost of training is £300, It
is anticipated that once qualified, I will work a number of sessions
free to repay the outstanding £150 – would it be better to pay this cost
outright and start earning immediately?

Spares / Repairs – costs incurred to maintain my motorcycle including
tyres (Some expense already incurred for a new battery)

Personal Equipment – Replacement Crash Helmet, Jacket, Trousers, Gloves,
Boots (No expense incurred to date but certainly anticipated)

Legal Costs: Costs for MOT & Road Find License (I am covered by the
training companies insurance whilst instructing)

Many Thanks


Allan

 

How long's each "session"? Minimum wage is just under £6/hr now.

Aren't bikes 24p/mile?

Won't make a difference, because it's the year end figure that matters.

Covered by the mileage figure.

If it's specifically for the instructing, yes. Otherwise you might be
able to pro-rata it, according to the split between your personal and
business mileage.

Covered by the mileage figure.

As for tax - you just need to do self-assessment at year end.

 

Only if he claims the mileage figure. That might not be his best bet.

 

True. What's the benefit-in-kind score on a bike?

 

Dunno! I do know the "EKS for just one employer" itself is a bit of a
minefield, and the answer to that'll largely dictate the rest of it -
so the OP really needs someone who knows all this in detail.

 

IR35? Don't think that's going to be an issue, for two reasons - mainly
because he's clearly not a disguised employee, since he'll be retaining
the day job - but also because he's not a limited company, so there's no
question of doing the dividends-instead-of-salary payment route.

 

You may well be right, although

plenty of people have day-jobs and evening/weekend jobs with different
employers - the IR tend to pick one for the tax code and set the other
code as BR

but there are (or were when I last looked at it) other tax advantages
to being self-employed - such as more costs [1] you can claim against
tax.

[1] the journey to work, specifically mentioned by the OP, being one
of them, and workwear another.

 

How will you be paid - will you Invoice them each month or will they
pay you on a payslip?

Steve

 

If you are self employed this sounds like unfair restriction of trade!

Paul

 

Having read this lot, spoken to the tax office and investigated
www.hmrc.gov.uk/calcs/esi My understanding is that I will be considered
self employed

I will be paid by the training company on submission of invoice

I can claim either 24p / mile for petrol, maintenance & running costs
or keep all petrol all relavent receipts and assess the business /
private % of each at year end and claim the full value from the revenue.

I may also claim the full value of any clothing such as helmet, gloves
etc providing that they are used exclusively for the training role.

Any / all training fees / petrol / mileage incurred upto the start of
trading is inadmissible. Ongoing training will, however be ok to submit

If I make a loss then the value of that loss may be offset against my
PAYE tax code at whatever tax rate I am paying

Profits will be taxed at my PAYE rate too


Do the assembled feel that this is a fair understanding of the position ?

Thanks again

Allan

 

Adrian wrote:

Usually start around 8am, finish anytime from 16:00 - 18:00 depending on
how quickly the students progress, so worst case could be a 10 hr day
for £62.50

Allan

 

In addition to my regular, full time PAYE main employment I worked as a
diving instructor for four years (occasional evenings & weekends). The IR
were very helpful when I rang them to discuss the tax implications and were
very happy to explain everything I could and could not claim for which was
basically 40% of anything I spent in the course of my work, including some
scuba kit which I used solely for training purposes. I worked for a single
'employer' throughout and was registered self-employed. I never had a
single query and claimed back about £5k during that time.

Call them - they're surprisingly useful and absolutely free. They want you
to get your tax right just as much as you do - so they claim!

 

That's a useful link, thanks.

As Timo says, it might pay you to look into this a bit more.

Yep.

 

Yes, and things like public liability insurance, membership of professional
bodies, etc. I used to claim for anything necessarily incurred in the
course of trading which wouldn't otherwise have been, I submitted detailed
accounts and never got pulled up once.

Like everyone else said, yes.

 

They were very specific on this. There is no pro rata arrangement for
this clothing/equipment it seems that unless you are using the
clothing 100% for the business you cannot claim any portion of the
costs

Allan

 

I called them twice today and apart from the inevitable delay
connecting, I have found them very helpful and approachable, even
found one with a sense of humour !!

I stressed that I was keen to set this up properly and they seemed
very happy to provide a lot of useful information. I did get a bit
lost when they started to explain the alternative method of claiming
vehicle costs so I may just go for the simpler 24p / mile route.

I'm also going to make an appointment with a tame accountant who's
been recommended to me

Allan

 

What about if you had a separate set just for business use?

 

The IR confirmed I could claim for a £500 set of scuba regulators and gauges
on the basis that I needed them for teaching purposes because my usual ones
were non-standard[1] and therefore unsuitable for demonstrating to students.
I had a choice, as I recall, of claiming back 40% as tax relief in one go or
amortising (is that the right word?) the entire amount over three (or five?)
years (can't remember which).

Worth bearing this sort of thing in mind, perhaps.

[1] DIN vs. A-clamp.

 

Why bother?

 

HMRC look on clothing differently to everything else. Because we all
need clothes anyway they apply the "wholly & exclusively" test pretty
rigorously, with no allowance made for dual (business and private)
use.

See http://www.hmrc.gov.uk/manuals/bimmanual/BIM37910.htm for more
detail.