Simon:
We've had a few thoughts about the driver instructor training, and thought it easier to put them down on paper rather than try and remember the details for a phone call.
Although you may think otherwise as you plough through them, the points are not made in any way to discourage you – merely to get you to think about the issues so that you go into it with your eyes open. We really do believe this is likely to be the way forward for you. With your driving record and the type of person you are, there is no reason we can think of why you wouldn't make a really good driving instructor. You may well have thought of some or all of these yourselves, but anyway…
You said that you had done a financial forecast based on working 40 hours per week, but you need to remember that 40 hours teaching is not 40 hours working, since you will have some time between lessons, and at the start and end of your working days. Clearly, you may hope that much of this will be in relatively close proximity, but it may well not be, and in any case there is bound to be 15-30 minutes between lessons. The consequence of this is that 40 hours teaching may end up with you away for considerably longer than 40 hours – maybe even as much as 60 hours per week. If this is going to be too much, then you will need to adjust your forecast accordingly.
You will need to be clear exactly how many hours you will need to work each week merely to cover the franchise & petrol costs, and get from the AA a realistic figure of what a new driving instructor in your area might expect to be able to pick up in terms of work.
You said that the Uni is likely to provide a fair number of the clients, but of course this work will be seasonal in nature. It is highly likely that your income will therefore not be remotely 'steady' – so even though you have guaranteed outgoings, there is no guaranteed pay packet at the end of the week. You will therefore need to think very carefully about how you are going to operate your finances. This was one of the challenges we had to think about when I took early retirement from the NHS, but will be worse for you because you don’t have the savings and pension to bridge any gap that might arise, as we did.
Bearing this in mind, we would suggest that you don't consider giving up the Sainsbury's job until Emma has a permanent job. Once you leave Sainsbury's there is no safety net, so you may have to consider asking Sainsbury's for reduced hours (or even a return to the checkouts) once you are qualified, so that there is a bridging system that you can adjust until you see how much driving instructor work there is out there. You may recall I did a similar thing at BRI before handing in my notice – running YourRPA in fledgling form until we knew it might work. This was tough, but necessary for piece of mind (and in your case, income!).
Remember that once you are self-employed, there is no such thing as sick pay or holiday pay. There will also be a lot of paperwork involved as you will have to keep meticulous financial records and keep a 'good diary' to keep tabs on your lessons. [Have you thought through / asked the AA how you are expected to arrange your lesson timetable when you will be in the car for most of the day?]
You also need to bear in mind that once you start earning the type of figures you hope for, and once that figure climbs above £15,000 per year, then you will become liable to pay back your student loan, which will be more complicated for you as a self-employed person than as an employee, when it would have been taken through PAYE. This means that you will have to make the payments yourself (we don't know how they will require this to work). If you earn as much as you had hoped from the figures you gave us the other day, this could be as much as £30 per week.
This of course also brings us on to the fact that you will need to budget for national insurance payments of £2.80 per week + 11% of your profits, along with your tax, which will be like mine – assessed through a tax return and paid in two lumps in January and July. At the end of the first year you will have to pay what you owe for the year just passed, as well as an estimate they will make on your next year's income (half of which has to be paid in advance).
One final drain on this money will be the need to provide for some kind of personal pension plan. At 30 years of age you will have rather less than others who are enrolled (as I was) in a work's pension. We would have thought that you should have been enrolled in the Sainsbury's pension scheme (perhaps you are?) – if not, you should enquire about this since they should be putting in as much as you do – this has been part of employment law for over 10 years, and would be transferable to a personal plan when you do eventually leave.
We guess all of this looks pretty depressing, but your Mum's calculations are that even with all this doom and gloom, you should still be substantially better off if things work out well. Once you go above 20 hours of lessons per week, you should start to earn more than you do at Sainsbury's, and of course every hour over that figure is then an improvement. Of course your tax credits will alter that calculation to a point where you may need to exceed 24 hours of lessons per week, although once Emma gets a job, the tax credits will shrink / disappear anyway.
Remember that it is a well-known fact that anyone starting up their own business generally struggles for the first few years, but it should improve as time goes on. There are also clearly career prospects, in that you could presumably become a driver instructor trainer yourself or even a driving test examiner (as both mine and your Mum's instructors did).
As we discussed when this idea came up originally, we are happy to loan you the money for the block payment of training fees. If you let us know as and when you need to pay the training fees and get the information from them, we will do a BACS payment directly to the AA. This is better for tax purposes, since there are rules about 'gifts' to children, but paying for their 'education and training' is probably outside the scope of the tax liability rules.
Mum & Dad
PS - talking about career moves - have you emailed Mike & Jane yet?