Please note that while we aim to provide helpful general tax guidance for private tutors, we are not tax advisors. We recommend that you seek independent professional advice for your specific circumstances.
Your Working Status
Tutors on Sherpa are self-employed. They are contracted for their service by clients directly and so are classed as working for themselves as a business.
Sherpa is a platform service used to conduct online tuition that produces an invoice for each lesson on the tutor's behalf. The platform and payment fees are then deducted before transferring the funds to you via your Stripe Connect account.
All online tutoring work completed through our core platform will therefore come under the self-employment income bracket.
Note: Any work you do for schools via our schools platform is on a PAYE basis and is counted separately.
Tax Responsibilities
Depending on how much you earn on Sherpa and other self-employed work, you may need to file a self-assessment tax return every year.
This lets HMRC know how much you’re earning, including all other employment, so they can charge you the appropriate amount of tax each year.
For advice on whether you need to report your earnings, use the HMRC quiz on additional income linked below:
Your Sherpa Earnings
You can find records of all previous payments by heading to your tutor dashboard and then your payments page in the sidebar.
From there you can search your earnings between any two dates, then view and export the relevant invoices to later report to HMRC if necessary.
Keep in Mind: Only include your take home pay (after fees) as income. Sherpa platform fees are not included in your earnings.
Trading Allowance
The trading allowance is a single £1,000 deduction per tax year that applies to all your combined self-employed income.
If you are just starting out with tutoring and earn under £1,000 from self-employed work between 6 April to 5 April in a tax year, you may not have to report this income through self-assessment.
This depends on other ways you earn money as it a combined allowance. Martin Lewis has some great advice on what you need to report when making money online.
Registering Your Business
If HMRC recommends you file a self-assessment tax return for your projected income through Sherpa, set up a business as a sole trader on the HMRC website and you can register for self-assessment.
Most people set up as a sole trader when first starting out as a business. You can be a sole trader as your only job or be employed and self-employed at the same time.
There are other ways of setting up a business like a limited company. Both have very different tax and legal responsibilities.
Income Tax
What you will pay in income tax depends on how much of your total income is above your tax free Personal Allowance, and how much falls within each tax band.
In the UK, the usual personal allowance can change every year. See the latest tax rates and personal allowances here.
The deadline to complete your tax return varies on how you plan to submit it. See the HMRC guidance on tax return deadlines here.
Does Sherpa Count as a Business Expense?
As Sherpa's platform fee is not a running cost paid out of your own pocket without earnings, it does not count as a business expense.
Your business may have various running costs called expenses. You can deduct some of these to work out your taxable profit as long as they’re allowable expenses.
You cannot deduct business expenses if you have claimed your £1000 trading allowance reduction, so claim whichever is more beneficial.
Visit the HMRC website to learn more about self-employed expenses here.