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Contents

In this article we discuss:

Introduction

This tax guide aims to give self employed tutors a better understanding of the tax requirements side of their business, which many self employed tutors may find a daunting task.

When you work for yourself as a self employed tutor, income you receive has no tax deducted from it. You must work out your tax due, then report and pay it to HMRC by 31st January every year.

We cover when you need to tell HMRC you are self employed, how to register as a self employed tutor, self assessment taxes, allowable expenses, when and how to pay your tax, and completing your annual tax return.

This guide is for sole traders, and doesn’t cover a Limited Company, where different rules apply.

Working for yourself has so many benefits. You decide the rules, who you want to work for and when. Taxes can be a factor that put many people off.

Simple Taxes are here to change that. Specialising in taxes and self assessment tax returns for the self employed, let your personal accountant worry about the tax requirements side of your business for you. We will offer advice and keep you tax efficient.

While using a professional accountant isn’t a legal requirement, it can be extremely beneficial. With a keen eye for spotting allowable expenses, they will ensure you remain compliant with HMRC legislation when it comes to your tax affairs. They should also be able to save you tax, saving you money in the long run.

When Do I Need to Tell HMRC I Am Self Employed?

When your gross income (before expenses are deducted) goes over the £1,000 trading allowance in a tax year (6th April to 5th April), you will need to inform HMRC you are self employed and complete a self assessment tax return.

Once the tax year ends on 5th April that you exceed £1,000, you will need to inform HMRC and register as self employed by 5th October.

How Do I Register as Self Employed With HMRC?

This can be done online through the HMRC website. Or Simple Taxes can do this for you.

What If I Have Made A Financial Loss?

If you make a loss in the tax year, due to your allowable expenses paid exceeding your income received, you will have no income tax bill, but you must still declare your self employment figures to HMRC.

The loss can be carried forward and offset against future self employment profits.

Or alternatively, if you have employment income, the self employment loss can be set off sideways against your employment income, which may result in a tax rebate.

When Do I Need to File A Self Assessment Tax Return and Pay Tax?

The tax year ends on 5th April each year. You then have until 31st January the following tax year to file your tax return and pay any tax due on any profits after allowable expenses are deducted.

If your tax liability exceeds £1,000 you will be required by HM Revenue & Customs to make payments on account towards the following tax year. The exact amount of payments on account are due on 31st January and 31st July.

If you file your tax return and pay tax after the 31st January deadline, you will incur tax penalties.

What Income Do I Pay Income Tax and National Insurance On?

You will pay tax and National Insurance on your self employed cleaner profits. This is your total income in the tax year, less any business related expenses.

What Allowable Expenses Can I Claim On My Tax Return When I’m A Self Employed Tutor?

When calculating your taxable income for the year, you can claim allowable expenses against your income, to arrive at your taxable profit figure.

Below is a list of business expenses you can claim as tax deductions in your tutoring business tax returns. You can deduct the below tax deductible expenses from your self employed income:

How Do I Pay Any Tax Liability Due?

You can pay any tax you owe using your online HMRC account.

If you don’t have an online login you can set one up here (select create sign in details).

Alternatively, you can see here the other methods of paying HMRC:

What Are the Tax Thresholds and Rates for Self Employed?

Income tax is currently payable at 20% for profits over the £12,570 tax free personal allowance. This increases to 40% for any income over £50,270

Class 2 NI is a set weekly amount of £3.15 when your profits exceed £6725. Class 2 NI contributions ensure you get your annual tick towards your state pension. As soon as you reach state pension age, you stop paying Class 2 NI if you are still working.

Class 4 NI is 9.73% of any profits over £11,909

Sound complicated? Don’t worry! When you complete your tax return online HMRC automatically calculates any tax due for you. Or you can use the service of a qualified accountant such as Simple Taxes who will be able to offer professional advice specific to your current situation. Added bonus – you can claim any accountant fees as an expense!

What Records Do I Need to Keep?

When you are self employed you are legally required to keep all of your business records (business account bank statements, sales invoices, purchase and expenses invoices), for 6 years plus the current tax year.

This is in case HMRC ever ask you for proof of your figures. They can issue penalties if the required documents not available.

How Can I Keep My Accounts & Business Finances Organised?

Here are a few tips for keeping accurate records and keeping on top of your business accounts and money, which will in turn help you complete your tax returns at the end of the tax year:

Further Information

For further information on self employment, please read the HMRC guidance here.

If you are unsure how much tax you need to pay, need help with your taxes, tax relief and tax return get in touch with our expert team today at www.simpletaxes.co.uk . Send your details to Simple Taxes today, for a fast reply within 24 hours from your own dedicated accountant.

Disclaimer

The information contained in this blog is for general information purposes only, and not for accounting and tax advice. You should speak to a qualified professional about your specific circumstances before acting upon any of the information in this blog.

Date Published: March 2024