The Legalities of Working as a Private Tutor

Most tutors start out as sole traders and keep their own financial records. A simple income and expenditure spreadsheet should be fine to help you keep track of your earnings. As a sole trader, you need to complete a self-assessment tax return every year after the 5th April and the easiest way to do this is online. You have 3 months from when you begin your self-employment to inform HMRC of your status and obtain your Unique Tax Reference (UTR) number.

As your business expands, you may wish to consider hiring other people to work for you or you may want to set up your own tuition agency, in which case you'll need to change your legal structure and become a Limited Company. You'll also need to adhere to employment agency law and should seek appropriate advice from relevant qualified bodies.

Insurance for Private Tutors

As with any self-employed occupation, it’s important to know what your options are when it comes to insurance. Despite your best intentions, insurance claims can arise from the most unlikely of circumstances and at the most unexpected moments. Should such a claim occur, a good insurance policy can save you a significant amount of money in the long-term. We should say that The Tutor Website isn’t affiliated with any insurance providers and tutors should always shop around for quotes from a variety of providers.

Generally speaking, there are two types of insurance that tutors tend to have:

1. Public liability insurance

2. Professional indemnity insurance

Now, there’s no legal obligation for you to have insurance as a tutor and a lot don’t. However, far from it being our job to scaremonger tutors, if you plan to make a fulltime career out of the profession, we’d suggest that it’s worth thinking about.

Public Liability Insurance for Private Tutors

Whether you tutor at your home or at the homes of students, public liability insurance protects you against legal liability following an injury to a student (through a trip or fall, for example) or damage to third party property (spilt coffee on a laptop, for example).

If an incident does occur and you find yourself subject to a claim for compensation, public liability insurance would cover the costs in defending these claims. It would also cover the cost of any legal fees or compensation that you would have to pay in the event that your defence was unsuccessful.

Professional Indemnity Insurance for Private Tutors

Professional indemnity insurance covers you against any claims that you made a mistake in your work, or failed to provide an adequate service. For example, you may be working with a student to help them achieve a Grade A pass to enable them entry into university. If the student didn’t achieve the grade and the parents were unhappy with your service, you could be subject to a claim.

Professional indemnity insurance would cover the costs of defending your claim and like public liability insurance, would cover the cost of any compensation you’d have to pay if your defence was unsuccessful.

How Much Does Insurance for Tutors Cost?

We’d always advise shopping around for the best deal, but in general, you could find public liability and professional indemnity insurance for less than £10 per month each, with potential discounted rates for taking both together.

In recent years, more and more insurance companies have started offering insurance specifically for tutors, Hiscox and Endsleigh are among two companies that have dedicated tutor insurance packages.

The Tutor’s Association has also negotiated discounted insurance rates for their members, which could be worth considering.

What to Look For in a Tutoring Insurance Policy

With public liability insurance, it's important to know what level of cover you have. Most small business insurance policies have you covered up to £1 million, which should be more than sufficient. You should check what your level of excess is as a cheap insurance policy may look good on the surface but expect you to meet huge outlays on each claim. You should also check what business activities you're covered for to make sure that 'teaching' is actually listed on the policy.

For professional indemnity insurance, you should check that you're covered against damages like errors and omissions as well as failure to meet deadlines. Your professional indemnity insurance policy should also clearly explain the procedure, should a claim arise and map out exactly what the insurer will do.

In summary, it's important that you take the time to consider whether you feel that you should take out public liability or private indemnity insurance as a tutor. If you decide to take out a policy, make sure that you do some shopping around and get at least 3 quotes from reputable companies.

Action – Registering your business with HMRC

Most private tutors start out as sole traders and handle all their income and expenditure details by themselves. As a sole trader, there’s no legal obligation to use the services of an accountant to handle your paperwork, however, you do need to declare your new status as a self-employed person to HMRC. The following checklist should help you make sure you have all the correct legalities in place:

1. Contact HMRC within 3 months of your first lesson with a student. Have all of your personal and business details ready (more details in the next chapter).

2. Register for Class 2 and Class 4 National Insurance (more details in the next chapter).

3. Take a note of your Unique Tax Reference Number (UTR) once it’s sent to you. You’ll need this to complete your tax returns every year and you’ll need it when speaking with HMRC in the future.

4. Consider whether you need to take out public liability or private indemnity insurance and choose a suitable policy.

TaxMatters

Please note that the information below is only general. For concise information on paying tax as a private tutor, please contact Her Majesty’s Revenue and Customs, HMRC or an accountant.

From the moment you become self-employed as a private educator, you need to register as self-employed with HMRC within 3 months, as you would with any other form of self-employment. Technically, as soon as you receive your first payment for your private tuition services, you need to declare those earnings. Failing to register as self-employed can result in you being fined.

How To RegisterAsa Self-EmployedTutor

The easiest way to register with HMRC to give private lessons is to do so online. By completing a registration form, you are making HMRC aware that you are now working for yourself and you then become responsible for keeping track of your income and your expenses.

Once you are registered as self-employed, you will be sent a Self-Assessment Tax Return every year after the 5th April which will instruct you on how to declare your earnings for the previous year. This form will also highlight your deadline dates for when you need to return the form. If you choose to complete the form online, you are normally given an extended deadline to do so. Once you have submitted your form, you will then be contacted by HMRC and told how much income tax you owe for the period in question.

Paying National Insurance Contributions

Being self-employed also means paying your own Class 2 National Insurance contributions and if you earn over a certain threshold, you also need to pay Class 4 contributions. It is possible to defer your National Insurance payments and depending on your earnings, you may also be exempt from paying National Insurance altogether. In order to find out if this applies to you, please contact HMRC for further guidance and information.

Paying Value Added Tax (VAT)

The supply of private tuition is exempt for VAT purposes if it meets the following criteria Section 6 of VAT Notice 701/30, Education:

• The tuition is provided by a sole practitioner or member of a partnership, and

• The subject is one taught regularly in a number of schools or universities.

Private tuition is standard rated for VAT if it is

• Provided through a limited company (because the individual teacher is not acting independently of an employer);

• Provided by employees or subcontractors on behalf of a business; and

• A subject not commonly taught in schools or universities.

It is also worthwhile noting that you will only need to worry about registering for VAT if you have regisitered and are trading as a limited company and your VAT taxable turnover is more than £85,000. If you however want to voluntarily opt to register even if your turnover is less than £85,000, you are allowed to do so.

Completing Your Self-Assessment Form

In order to ensure that the process is as stress-free as possible, it’s a good idea to gather all the information that you need beforehand. It’s important to check that all your relevant paperwork is up to date. Legally, everyone who is self-employed needs to keep records of their income.

Here’s a brief outline of some of the information that you may need before you begin completing your Self-Assessment form:

• Records of your income and anything you can claim as expenditure like teaching materials.

• If you are both employed and self-employed, you'll need to know your PAYE earnings.

• Information on ‘other income’ including investments, savings and pensions.

• Details of any capital gains that you might have.

• Your P60.

• Your bank statements or access to your online banking account.

• A cheque book and paying-in book.

Will I File My Return Online Or By Post?

Filing your tax return by post is the traditional method for declaring your earnings although there are several advantages to filing online. By filing over the internet, you are normally given a longer deadline and are able to save your application as you go.

Am I Self-Employed Doing More Than One Job?

If you have more than one self-employed job you'll need to fill in some additional pages on the tax return form. The supplementary pages - SA103S or SA103F –provide a space for you to declare any earnings you have gained from other jobs where you are self-employed.

What Form Do I Fill In?

The form that you need to complete is called SA100. There are guidance notes to help you throughout the form and they tell you which parts you need to complete depending on your circumstances.

HMRC normally send you the forms you need and the guidance notes by post, however, you can also download the forms from the HMRC website.

When is My Tax Return Deadline?

The tax year starts on the 6th April and lasts until the 5th April the following year. If you’re returning your completed form by post, your deadline is 31 October. If you’re completing your forms online, you have until 31 January the following year. Missing these deadline dates can incur a £100 penalty, regardless of whether you have taxes to pay or not.

Additional Advice For Filing Online

Don't leave it until the last minute. In order to file online, you first need to register your login details on the HMRC website. You are then sent a password by post, which allows you to access the forms online. Sometimes this password can take a couple of weeks to be sent so make sure you leave plenty of time before you start the process of filing online.

If you're employed as a PAYE employee as well as a private tutor, keep your P60 safe when your employer sends it to you. If you lose you P60, you can't obtain a new one, you will have to ask your employer for a Statement of Earnings document instead, which shows similar information.

If in doubt, use HMRC’s Self-Assessment helpline or read their guide to filling in your tax return (https://www.gov.uk/government/publications/self-assessment-tax-return-sa100)

As always, if you are not sure on anything tax-related, check with your accountant, if you have one. On Google you can find loads of 'cheap tax accountants' who charge £100£300.