It has been estimated that the number of private tutors in the UK has risen to over a million in recent years – making tutoring jobs one of the most popular professions in Britain, especially as jobs for ex-teachers, 10,000 of whom are estimated to have left their profession between 2010 and 2015 according to a 2017 article in the independent.

The demand for private tutors today is the highest it has ever been, with tutors available for various subjects and skills with varying qualifications and experience. Due to this popularity, the home tutoring profession and private tutoring incomes are being monitored more closely than ever by the UK Internal Revenue Office, HM Revenue & Customs (HMRC).

In becoming a private tutor, you are classed as a self-employed sole trader. Working as a sole trader entails specific responsibilities, such as following tax laws and immediately reporting your earnings to HMRC. This is called a tax return and can be done online.

It would be best to record what you earn as a tutor as soon as possible once you have started working. Failure to do so will entail a penalty fine from the tax office, so it's safest to sort your personal income reports out immediately.

Reporting your income is a straightforward process; it doesn't have to be complicated or confusing. This guide will give tax tips, answer the questions that tutors frequently ask when starting their business, and show you everything you need to do to record your income and file a tax return.

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How do I Register as a Self-Employed Tutor?

You must register as self-employed with HMRC to pay the correct Income Tax and National Insurance for your wages.

Running a tutoring business can be simple as long as you follow the standards and procedures
Creating your own tutoring company requires you to register as self-employed. Source: Unsplash

As a sole trader, you must complete a self-assessment tax return every year after the 5th of April, which you can do online. You must do this even if you are also employed elsewhere, as this can change how much you have taxed all of your employment.

What you will pay in Income Tax depends on how much of your income is above your Allowance and how much falls within each tax band.

The current 2022/23 tax-free Personal Allowance in the UK is £12,570. This is the income you can earn a year that you don't have to pay tax on.

You don't usually pay the tax until the following January. This may seem friendly, but you'll be hit with a double tax bill at this time! That's because HMRC likes to take a biannual payment on account for subsequent years, and your first tax bill coincides with the first payment on account for the following year. Your payments on account are estimates and can be negotiated with HMRC.

Anything you earn over this amount will be taxed, and the tax you pay will depend on how much you earn above your allowance.

HMRC has been clamping down in recent years to ensure private tutors pay the correct taxes on their income to tackle tax evasion.

You must register as self-employed and submit details of your income to the government within three months of starting your work. Failure to do this puts you at risk of being audited and paying a fine.

Some tutoring companies operate Pay-as-you-earn (PAYE) as a middleman between the tutor and the student. If you work for an agency with PAYE, your work will likely be taxed at source, so there will be no paperwork for you to deal with. This usually means you will also pay a small payroll fee. You can also efficiently compute the payroll tax on your own.

Some tutoring agencies, including Superprof, operate on the basis that all payment is to be managed solely between the tutor and the student.

This means that all payment and income records are your responsibility, and you must keep a  tailed record of your earnings for HMRC.

How Do I Complete a Self-Assessment Form?

For a simple and easy self-assessment process, having all the necessary information you need for your circumstances is essential. In becoming a private tutor, you should keep records of your income and have all the relevant paperwork up to date to make this process as straightforward as possible.

For your self-assessment form, you will need the following:

  • Records of your income and expenses
  • If you are also employed, your PAYE earnings
  • Any 'other income records, such as pensions, savings or investments
  • A chequebook and paying-in book
  • Your P60
  • Your bank statements or online banking access

You must complete a self-assessment form called SA100, available on the HMRC website. There are guidance notes available to help you fill out the form.

There are supplementary pages of the self-assessment form to fill out if you have more than one self-employed job. These will allow you to declare any earnings from other jobs you have as a sole trader.

This can be filled out by hand, posted, or submitted online. HMRC can send you the relevant forms for your circumstances and the guidance notes to help you fill them out. They can also be downloaded from their website.

If you complete the form online, you must register and log in to the HMRC website. You will then receive a password granting you access to the online forms. You will receive the password in the post, which can sometimes take a couple of weeks, so leaving yourself plenty of time is a good idea.

The deadline for a tax return by post is 31st October. If you complete the forms online, then you have until 31st January. A penalty of £100 can be given if you miss these deadlines.

If you have any problems, call the HMRC Self-Assessment helpline on 0845 9000 444.

When you're all set up and ready to start tutoring, read up on motivating your students and improving their learning.

Don't forget that you also must pay Class 2 National Insurance Contributions (NICs), which are currently £3.15
a week. These go towards your state pension and other benefits, and HMRC will help set up a way for you to pay these regularly. Secondly, there are Class 4 NICs: 9.73% on profits between £11,909 and £50,270 and additionally 2.73% on profits over £50,270. These payments are collected at the same time as your income tax.

How Can I Keep Records of What I Earn from Tutoring Jobs?

How should a home tutor record their earnings?
Keep clear, detailed records of what you earn. Source: Visualhunt

As a sole trader, you are legally obliged to keep accurate and detailed records of what you earn. This is necessary so that HMRC can calculate your taxes correctly. This will also help you organise your business and make your tax return easier.

To keep on top of your records, you can organise your income into logs of income and allowable business expenditure, along with their relative dates.

It is essential to keep records of everything that you earn. For example, this can be done in a Word document, Excel spreadsheet or notebook. You can also keep a log of your expenses, including travel, advertising, books, stationery, insurance and home business use.

Keeping clear, detailed and dated logs of what you earn is the best way to keep on top of your business and will help you fill out your self-assessment forms quicker and more easily.

Make sure everything you record is honest and accurate, and take the time to double-check all the information you input into your books, documents or spreadsheets to make sure there are no typos or mistakes.

Expenses are necessary to keep track of when completing your tax return, as you can deduct those costs from your taxable profits, reducing your tax bill.

What Tax Do I Pay if I Become a Tutor?

Being self-employed means paying national insurance and income tax on your earnings above your allowance.

What taxes do private tutors pay?
You might have to pay tax on your income depending on how much you earn—source: Visualhunt.

You will pay your own Class 2 National Insurance contribution. You may also need to pay Class 4 National Insurance contributions if you earn over a certain amount.

Most home tutors work alongside another job. If private tutoring is a supplement to your other employment, this will affect what you are taxed overall, as you are earning money from more than one job. Whatever you earn over your allowance is taxed across all of your employment.

Many tutors also work alongside their university studies. This usually means you are not earning as much as full-time tutors or tutors with other full-time employment, and you may not exceed your allowance. If this is the case, you will not pay taxes on what you earn, but you must still declare what you earn to HMRC.

You might be exempt from paying National Insurance altogether, depending on your earnings.

As a sole trader, you might also have to pay value-added tax (VAT). If you earn over a certain amount, you could be eligible to pay VAT for your services. In the 2021/22 tax year, the threshold for VAT registration in the UK is on earnings of over £85,000.

Now you have a complete understanding of how to report the income earned from tutoring, learn more about obtaining DBS checks, the legalities of giving home tuition and the types of insurance you could invest in.

You can also check out the article: New DBS checks replace CRBS - A summary of the changes.

Want to give private lessons?

Join the Superprof community and share your knowledge with interested and motivated students.

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Ellen

Ellen is a writer and translator with a passion for literature, traveling and learning new languages.