There are few certainties in life, but tax is one of them…
I know that the guidance on Tutorful says that the tax is a matter for tutors; however, here are some thoughts.
I have found that having an accountant is very helpful. I don’t get all my students from Tutorful (although most students do come through Tutorful) and this can complicate matters. Below are some things that I have found helpful.
- Have a separate bank account for all tuition income and another one for tax saving - put 20% of your tuition income into this (or 40% if you are a higher rate taxpayer each month).
- Keep receipts for any equipment, books, software or consumables that you buy for tuition.
- Keep records of:
(a) travel, including to visit shops to buy tuition equipment (you can offset this) - you can even claim travel to visit your accountant!
(b) mobile phone contracts (you may be able to claim a portion of this back)
(c ) broadband (again, if tutoring online you may be able to claim some of this back)
(d) Any money you give to charity via GiftAid (even if you are a basic rate taxpayer, you will get some of this back).
(e) Membership of any professional subscriptions, website subscriptions etc. that you use for tuition.
- You can claim the working from home allowance - it’s not much but every little helps.
These are all things that my accountant has found really helpful - I don’t really know the details of how they claim the allowances, but the above might be helpful. The accountant’s fees are not as high as they might seem, as these can also be offset against your tax bill.
I would strongly advise careful tax planing (if you get caught out, I’d imagine it could be quite nasty!). I have found it really useful - if you have 3 years’ worth of accounts from a chartered accountant, these can be used by the banks if you need a mortgage.
Just some thoughts really…
Hope you find them helpful.
Thanks for sharing these tips @HenryG! Not the most exciting of topics, but as you said - it is one of the few certainties in life!
So far, I have been sorting out the taxes myself as until last summer tutoring was only a part time job. But now as I have more students I have started to think about getting some professional help from an accountant
How did you find your accountant? Do you have any advice for me as I start looking for one?
I spoke to friends - I was doing some freelance advisory work with schools alongside my Head of Department role. I went to one that had a good reputation - word of mouth is very helpful. I’d ensure that you get someone local to you and that you can travel to easily (mine is out of town and just a few miles from my house). Also make sure that they are registered as chartered accountants, otherwise you can’t use them for mortgages etc. They have been excellent - (I am in York, so could recommend if you are close by) and I reckon it’s been worthwhile - protects me from making any costly errors - it’s only a couple of hundred pounds a year and I think that they recover more than their fee because they know all the rules!
An accountant gives you peace of mind for about £200 a year. You know things have been done properly. Well worth it.
Thank you @HenryG and @Fabiankasper! It is definitely worth it, especially if it can improve our credit score and save us some more money long term when applying for a mortgage. I didn’t know you needed a chartered accountant for this so thanks again for sharing
Sadly I live all the way in Scotland but thanks anyways
Hi - Well done Henry - I was thinking of doing this and he has beaten me to it. Please - get an accountant, believe me it will pay for itself as a accountant will know what you can claim for, he or she will save you money. I am not brilliant at this - I normally keep a monthly record of income - have one file that is dated by year and stick everything in it. Make sure you get receipts for all books and materials any purchases related to Tutoring. I get my PC serviced and cleaned each year - claim for that, bought a new laptop and computer desk, claimed for that, professional journals (In my case History today and its archive) claiming for that. Do you realize that you can claim a percentage of your ISP broadband costs - I think its 10%, point is my accountant knows and he claims it!
Hi I do not use an accountant because I previously did some book keeping. however if you are unsure what to to do you should get an accountant.BUT the HMRC videos are really good and explain everything. As others have said you need to keep good records of spending and income - no cash deals, . Obviously anything you buy directly eg TES resources are totally accountable but if you work form home you are allowed a proportion of everything. So if you work 5 days a week in a quarter of your home, you are allowed to claim electricity, heating etc at that proportion. Also you can claim for repairs to the building proportionally and if you travel for face to face lessons, again mileage is considered against for example a lease. At the moment I am having a part of my garage turned into an office and that is totally tax deductable. Your wi fi is also proportionate deductable not a flat 10% if you use 50% for your business. you can claim that, if you can prove it. all down to data. There are so many things you can offset eg printing, paper, mobile Wi-fi car fuel electricity coal gas wood - we do not have central heating - chimney sweep, and so on. BUT you must take charge and KEEP records. If anyone has any questions i will do my best to answer but I am not a tax expert. The most important thing is to be proactive and keep records and receipts.