Calculating Taxes Based on Tutorful's Cut

Hi everyone. This is the first year of tutoring where I will be making more than the government’s personal allowance. I want to make sure I’m paying my taxes properly.

I’ve been keeping records of my earnings over the last year. However, I’ve been calculating them by deducting the 20% Tutorful takes as platform costs (e.g. charging £40 for a lesson and being paid £32 into my bank account).

Will I have to calculate taxes based on the £40 or the £32?

In addition, If the £40 is the amount being taxed, does the £8 that Tutorful takes count as a business expense?

Thanks in advance!

I’ve always just done my earnings rather than my earnings + tutorful’s cut. I hope I’m not wrong lol.

6 Likes

Just do the money that goes into your bank account. That’s how much you earn for it. I see it as me earning the £32 and tutorful earning the £8,in that scenario.

3 Likes

For self assessment of self-employed people HMRC have introduced a “cash basis” format. This is simply how much money you actually receive in your bank account - no need to work out how much you charge and Tutorful’s cut. It made filling out the online forms much quicker and simpler this year!

3 Likes

The '“earnings” tab on the website records what you earn after Tutorful takes their commission fee, so just write down all the earnings from that and you’ll have the Tutorful aspect of your income accounted for.

2 Likes

Brilliant. Thanks everyone for your replies! One more thing:

Does anyone know how the “trading allowance” can be utilised? An additional £1000 as part of my allowance would be much appreciated! I’ll be earning more than £1000 this year, but I don’t know whether I can use the trading allowance or not, regarding the whole pay vs gross income problem I’m having.

I know that not everyone agrees with me but I have used an accountant for years - they know the rules and the system, they know what you can and cannot claim for and will get the best out of HMRC for you as their client. Best of all what you pay an accountant to do your tax return IS A TAX DEDUCTABLE EXPENSE.so you get it back! makes sense to me !!!

The tax deductable expense just means it isn’t money that you will be taxed on, so it still costs to do it, you just take it off the profit you make that year so you’re not taxed for it.
I can definitely see the appeal to getting one, but for now I don’t mind doing the taxes myself. The expenses and income are pretty straightforward for tutoring really, but I can see why others might get one. Maybe one day when I am earning a bit more.