28/11/2025
Budget Update 2025
Main headlines for a driving instructor
A total farce on budget day as the full budget changes were leaked and uploaded into the internet 45 minutes before the chancellor stood up.
The labour government in their manifesto at the last election stated no tax rises would be implemented. This budget goes against that pledge as certain income the tax rate increases from 20% to 22%
There are also other measures that increase costs to the driving instructor
The following changes are made to English tax rates. Scottish tax rates will be notified later.
For the average driving instructor the following changes will be impacted
- A freeze on personal tax thresholds all the way to 2031-2032, meaning that as inflation happens, the personal allowance of £12,570 will be frozen and therefore this is called a fiscal drag, and therefore your income after these frozen allowances will not go as far.
- A new 22% tax rate from April 2026 if you have property/rental income. This is currently 20%. Higher rate tax payers this increases from 40% to 42%
This is making the tax system more complicated with new tax bands.
- a new 22% tax on savings and interest received. If you have over £1000 of interest then the tax rate rises from 20% to 22% from April 2027
- If you don't claim 100% tax relief on your car in year one, the following years the tax relief on the car will reduce from currently 18% to 14%
This will directly increase your tax in future years
- Diesel and Petrol fuel duty is frozen until September 2026, then there will be regular increases, driving up the cost of fuel
- A new annual 3p per mile mileage tax on electric vehicles commencing April 2028. So in addition to Road Fund Licence if you do 30,000 miles per annum you will pick up a £900 extra tax charge. Vans are exempt !! So if you teach driving lessons in a van this new tax will not apply !
- A new annual 1.5p per mile mileage tax on hybrid vehicles commencing April 2028. So in addition to Road Fund Licence if you do 30,000 miles per annum you will pick up a £450 extra tax charge. Vans are exempt !! So if you teach driving lessons in a van this new tax will not apply !
- A new real time forecourt system so that you can see the cheapest fuel for the surrounding area, designed to stop harmonising garages
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