Self Employed
Capt BK
You can make all this simple or complicated.
The decision as to whether you may work self employed at a school or not is generally left to the local tax office to decide, which is what makes life so complicated in discussing the issue. However as long as you keep detailed records of you income and declare it fully together with your expences you will not have a problem. Most tax offices accept Flying Instructors subject to Schedule 'D' status owing to the vagaries of the earnings. However the tests applied in law to establish employed v self employed are complex. It would be unlikely that a Flying Instructor could in the normal school environment prove actual self employed status. Although as I have said most tax offices accept the reality that exists.
Different from what has been said so far the risk is greater for the flying school than you. The law is simple. Should no tax be deducted from your earnings when it should be then the school will be required retrospectively to pay your tax and NIC. Most employers liabilty insurance covers Flying Instructors retained by them. Your tax status is irrelevant. Public liabilty held by the school also applies.
Should you wish to be completely self employed as an individual aside from any flying school then you enter the real world. The £10-15 per hour paid by most schools will appear very reasonable and the apparent mark up by the school over the actual cost of the aircraft operation will seem meagre when all the issues are taken into account.
Owners of aircraft wishing to retain you individually will not want to pay you more that the school will pay you. Add the cost of Employers Liabilty and Public Liabilty Insurance to your costs and it will mean that you will no cheaper than what the average school charges. These columns are littered with such examples; in the main insurance companies, it would seem, are not prepared to insure an individual Flying Instructor working outside of an actual structured organisation.