A weekly franchise fee that supplies your pupils and often your car, in exchange for a cut. Here's how Making Tax Digital for Income Tax applies to franchise instructors, what you can claim, and when it starts.
MTD for Income Tax phases in by gross income before expenses. The key point for franchise instructors is that the threshold looks at your income before the fee.
Your franchise fee reduces your take-home, but the threshold is measured on your gross lesson income before it comes off. Recording your lessons and the fee separately keeps your gross clear and your tax based on the profit you keep.
When you're in scope, your annual Self Assessment return is replaced by four short quarterly updates and a year-end final declaration, all through recognised software.
Record your gross income and the franchise fee separately so your profit and your threshold position are both clear.
Your defining expense. Record it against your lesson income so you're taxed on the profit you keep.
If the car is leased as part of the deal, the lease cost is generally deductible. Keep the franchise breakdown to record it correctly.
The fee lowers your take-home, but the threshold looks at gross lessons. Record both so you know exactly where you stand.
Comparing the numbers is easier with clean records. See our independent instructors guide.
Recording your gross income and franchise fee separately is the key to accurate figures. Clear Books keeps them tidy and gives HMRC exactly what MTD needs.
Record lessons and your franchise fee as you go, watch your gross against the thresholds, and be ready to submit when your wave lands.
