If you’ve been hearing about Making Tax Digital (MTD) and wondering what it means for you as a driving instructor, you’re definitely not alone. Many instructors worry it will mean more paperwork, more stress, and more complicated tax rules. And whilst it’s true that there will be a little more to do, in reality: If you’re already keeping digital records, you’re already most of the way there. If you’re using MyDriveTime, our tools ensure Making Tax Digital compliance is straightforward and stress-free. And if you’re not? Don’t worry! We’re here for you, too. Deep breath; let’s go!
What is Making Tax Digital?
Making Tax Digital (MTD) is a new system from HMRC designed to modernise the UK tax system. Instead of submitting one tax return each year, self-employed people will:
- Keep digital records of income and expenses
- Send quarterly updates to HMRC
- Submit a final declaration at the end of the year & pay any tax owed
For driving instructors who already keep digital records, the main change will simply be sending updates more regularly.
For those still relying on paper-based systems, it’s the perfect time to ‘go digital’ and not only comply with Making Tax Digital, but benefit from everything digital has to offer. Whichever camp you’re in, and however daunting this may seem, we are here to make this easy for you.
Why is HMRC introducing Making Tax Digital?
HMRC estimates billions of pounds are lost each year due to simple accounting mistakes and inefficiencies, typically caused by older, analogue methods. The difference between the tax owed and tax paid is known as the ‘tax gap’, and HMRC wants to eliminate it.
HMRC’s introduction of Making Tax Digital means you need to:
- Keep digital records of income and expenses
- Send quarterly updates to HMRC
- Submit a final declaration at the end of the year & pay any tax owed
Essentially, they want to know more and receive more while making things easier for everyone. Digital data helps make this happen.
And as advocates for digital record-keeping for driving instructors, we’re on board! It’s a little more effort in the short term, but it’s ultimately good for instructors, and for our country as a whole.
Making Tax Digital Timeline
HMRC are still tweaking things, so are introducing MTD gradually.
From April 2026
Self-employed individuals earning over £50,000 from self-employment and property must comply.
From April 2027
Those earning over £30,000 from self-employed and property will join.
From April 2028
It is expected that those earning over £20,000 from self-employed and property will join.
Most driving instructors will therefore be affected from 2027 or later, meaning there is still plenty of time to get into good habits.
What a typical MTD tax year looks like
Under Making Tax Digital, you’ll send four quarterly updates in addition to a final declaration.
These quarterly updates are not full tax returns and no tax is paid – they are simply summaries of your income and expenses.
How MyDriveTime will help you
Helping instructors get things done is what drives us forward.
We’re providing access to everything you need to solve Making Tax Digital. Just follow these steps…
Getting things ready
- Learn about Making Tax Digital here, and via our award-winning support team
- If you haven’t already, complete your free trial and subscribe to MyDriveTime
- Choose the Making Tax Digital submission option that best suits your needs
Record in MyDriveTime as you go
- As you receive a payment or incur an expense, record it in MyDriveTime as soon as possible
- Upload receipts for expenses, in case you need them later
- Manage the time your students buy and use as you deliver lessons
Send updates & final declaration to HMRC
- We’ll tell you when a quarterly update is due, and help you package your data ready for submission
- Transfer your records to your selected submission partner in a few simple steps
- Confirm once your submission has been completed
Submitting your records to HMRC
Confidence varies when it comes to bookkeeping or accounting, so we’re providing you with four options to help you get it right on your terms:
| Option | Best for | What it includes |
|---|---|---|
| Managed | Instructors who want everything handled by a professional accounting service. | Comprehensive professional accountant support |
| Hybrid | Instructors who will submit their own quarterly returns, but want help with the final declaration. | Connection to software + professional services |
| Connect | Instructors comfortable with accounting & MTD submissions via bridging software | Connection to Xero or other software |
| Export | Instructors making their own arrangements. | Export payment records into a CSV file |
Managed
For instructors who want complete peace of mind, we’ve teamed up with industry accounting specialists FBTC, building on our existing partnership spanning over 10 years.
This service will include:
- Accountant review of your records
- Submission of all quarterly updates
- Your annual final declaration completed
- Ongoing guidance and support
Monthly Cost:
£49.99 (including VAT).
Hybrid
A great option for instructors who are comfortable with bookkeeping and are happy to submit their own quarterly updates to HMRC, but would benefit from working with an accounting specialist when it’s time to submit their final declaration.
- Submit quarterly updates yourself
- Have your year-end final declaration & tax calculations completed by a professional
- Requires a Xero subscription and is delivered in partnership with DriveAhead Bookkeeping.
Monthly Cost:
A Xero “Simple” subscription is just 35p for 6 months, followed by £8.40 per month thereafter. Plus… The completion of your final declaration via DriveAhead Bookkeeping is approximately £30 per month (including VAT).
Connect
If you prefer to manage your own finances, you’ll be able to connect MyDriveTime with your preferred accounting software package and transfer records into it. You can then supplement your records with other income (e.g. property rental) and submit to HMRC when you’re ready.
- We recommend Xero as our platform of choice, but will also be integrating with QuickBooks and FreeAgent soon.
- Already have a Xero account? No worries; we’ll help you connect it to MyDriveTime.
- Need a Xero account? We’ll guide you through setting one up and connecting it to MyDriveTime at the same time.
Monthly Cost:
A Xero “Simple” subscription is just 35p for 6 months, followed by £8.40 per month thereafter.
Export
If you work with an accountant who doesn’t use software that we integrate with, or you have plans to manage your Making Tax Digital obligations via other means, this option keeps things simple.
Using existing tools available within MyDriveTime today, you’ll be able to:
- Export your payment records
- Download them as a CSV file
- Upload them into your own accounting
software - Send the file to your accountant
Monthly Cost:
Nothing. It is included within your MyDriveTime subscription.
Why start using MyDriveTime now?
The easiest way to prepare for Making Tax Digital is to start keeping digital records today.
MyDriveTime is a comprehensive driving instructor business management solution, helping thousands of savvy instructors to manage:
- Diary planning
- Lesson delivery, including journey tracking
- Student information & progress
- Financial records
- Test outcomes & SCIs
- Multi-instructor teams
Get ready for Making Tax Digital today
Thousands of driving instructors already use MyDriveTime to run their business. Starting now means you’ll be ready when Making Tax Digital arrives.
Making Tax Digital FAQs
Do I need to worry about Making Tax Digital?
Will I have to submit four tax returns every year?
What records do I need to keep?
What if I'm not confident with accounting?
When should I start preparing?