Tutoring and claiming milage costs

[Andeh1]

Hi all,

Wife does some part time private tutoring for a top up to the finances, it's only a couple £hundred a week, but she has her first longer distance customer which is around 70 miles a day.

Some research reveals she could claim back 45p a mile. She isn't set up as a contractor, Ltd company etc and it's all cash in hand work.

Is the 45p/mile an option? It all seems too good to be trust, albeit having only ever been PAYE myself I've never looked into this world.

Just welcome any advice on how to approach things.

Thanks in advance.

Edited by Andeh1 on Monday 16th February 11:13

[Countdown]

That's absolutely fine.

You say "cash in hand" but I assume you'll be declaring it to HMRC? You can't offset mileage costs against income if you don't declare the income

ETA just to check - is she registered as self employed?

[Panamax]

Don't forget to make sure the car's insured for business use.

[Andeh1]

Yes, car insurance adjustment was one thing I made!

Havnt declared it to HMRC as only been cash and low sums at that, the future growth it to the £couple hundred we hope.

I presume as part of declaring it all, incl the travel, you still pay no tax... It's all just done above board? Incl claiming fuel?

[Countdown]

Andeh1 said:

Yes, car insurance adjustment was one thing I made!

Havnt declared it to HMRC as only been cash and low sums at that, the future growth it to the £couple hundred we hope.

I presume as part of declaring it all, incl the travel, you still pay no tax... It's all just done above board? Incl claiming fuel?

You'd have to pay tax if you/she makes a profit.

Tbh I'm a little confused - if you aren't intending on declaring the income you won't be able to offset the car mileage against anything.

Basically you need to be paying some tax in order to offset costs against the tax.

[Simpo Two]

Countdown said:

Andeh1 said:

Yes, car insurance adjustment was one thing I made!

Havnt declared it to HMRC as only been cash and low sums at that, the future growth it to the £couple hundred we hope.

I presume as part of declaring it all, incl the travel, you still pay no tax... It's all just done above board? Incl claiming fuel?

You'd have to pay tax if you/she makes a profit.

Tbh I'm a little confused - if you aren't intending on declaring the income you won't be able to offset the car mileage against anything.

Basically you need to be paying some tax in order to offset costs against the tax.

£200pw = about £10Kpa so it could be within her income tax allowance. But should still be declared because she's trading. Decide how much of her motoring costs are for business (as opposed to private), and take that proportion from the gross profit.

[Andeh1]

Thanks all, you can tell I'm new to this!!

Is that the expectation then, she either keeps her income under the taxable income, and is unable to therefore claim any milage back as part of it.... Or she works longer, becoming taxable and then be able to claim the fuel back?

[Countdown]

Andeh1 said:

Thanks all, you can tell I'm new to this!!

Is that the expectation then, she either keeps her income under the taxable income, and is unable to therefore claim any milage back as part of it.... Or she works longer, becoming taxable and then be able to claim the fuel back?

Yes that sums it up basically.

If her total income is below £12,570 she won't be paying any tax, so she won't be able to offset any employment costs against tax.

If her total income is above £12,570 she will be able to use any employment-related costs (45ppm, mobile phone, laptop, accountancy fees, basically any csts she's incurred as a result of her work) to reduce her profits. that way she'll only be taxed on her net profit and if this fa;;s below £12,570 there won't be any tax to pay.

[Andeh1]

Thanks very much all, that's been very helpful!

[AndyAudi]

Countdown said:

If her total income is below £12,570 she won't be paying any tax…..

Just to be clear, by “total income” that doesn’t just meant the income she earns from the tutoring….

If this is a part time side thing in addition to her main job (eg a teacher) she’d be earning over £12,570 total income before starting any tutoring….

Short term folks prob turn a blind eye, but regular /advertising services attract attention for undeclared income

[AndyAudi]

Andeh1 said:

Hi all,

Wife does some part time private tutoring for a top up to the finances, it's only a couple £hundred a week, but she has her first longer distance customer which is around 70 miles a day.

Some research reveals she could claim back 45p a mile. She isn't set up as a contractor, Ltd company etc and it's all cash in hand work.

Is the 45p/mile an option? It all seems too good to be trust, albeit having only ever been PAYE myself I've never looked into this world.

Just welcome any advice on how to approach things.

Thanks in advance.

Edited by Andeh1 on Monday 16th February 11:13

Just as an aside
You don t get 45p a mile from HMRC for doing the miles, what you get is an allowance that it costs 45p/mile to deduct for taxable income.which if you’re not paying tax on is worthless

keep it simple, stay local or charge extra to cover travelling time/fuel

“ I can tutor you but with 70miles driving I m going to need to charge an extra couple of hours for my time - understand if you want to find a more local tutor “

[Andeh1]

Yes, fortunately we assumed for fuel/time for travelling originally, I only stumbled across it when I remembered an old friend did some contracting in a previous career which included the 45p.

[ChrisH72]

I am a self employed music teacher.

If your wife's income exceeds £1000 a year then technically she should register as a sole trader. She won't pay any tax if her income is below the personal allowance but she should keep records and do self assessment anyway. One benefit is she could then make voluntary national insurance contributions towards her state pension.

Claiming mileage is done when you fill in your tax return. Just keep a record of business miles then use the 45p per mile to calculate the expenses.

I know plenty of people who do just work cash in hand and don't declare it because their income is low. Happens a lot in my line of work which is similar to tutoring. But really it's better to do it all above board and not too difficult. MTD is coming in the next couple of years depending on income which will require using compatible software to record and submit to HMRC.

[Simpo Two]

I think the '45p/mile' thing is for PAYE people. If you're self-employed you can charge whatever you like for mileage and add it to the bill. That gives your gross profit. In the bank, ching. Then you keep a record of all motoring expenses, decide what proportion of your travel is for business and take that amount off your gross profit, along with anything else like 'use of home for business', when you do the tax return before 31 Jan 2027.

Where's Eric?

[Countdown]

For what the OP is describing it would be much easier just to claim 45ppm. Claiming “actual costs of business mileage” would mean a lot of paperwork to keep a track of all costs as well as business mileage incurred and then doing a pro rata exercise (I’m not sure how they would adjust for depreciation or capital allowances).

If it was your main employment then fine, but imo it’s over complicating things for a side hustle.

[ChrisH72]

Simpo Two said:

I think the '45p/mile' thing is for PAYE people. If you're self-employed you can charge whatever you like for mileage and add it to the bill. That gives your gross profit. In the bank, ching. Then you keep a record of all motoring expenses, decide what proportion of your travel is for business and take that amount off your gross profit, along with anything else like 'use of home for business', when you do the tax return before 31 Jan 2027.

Where's Eric?

45p per mile is part of simplified expenses for self employed. There's a flat rate for all sorts of expenses you might claim. I can't remember when they brought that in. Years ago I used to claim a percentage of my total motoring costs so tax, insurance, maintenance, fuel depending on how much I used my car for work. But it was complicated and when you sell the car you can get stung for tax if it goes for more than HMRC think it should be worth. The flat rate is much easier. You definitely can't just put down whatever you like though as the revenue could question it, and nobody wants that hassle.

[Pit Pony]

Andeh1 said:

Yes, fortunately we assumed for fuel/time for travelling originally, I only stumbled across it when I remembered an old friend did some contracting in a previous career which included the 45p.

I was contracting via my Ltd company. So 2 different legal entities.

Every week I the employee and director filled in an expenses claim sheet, which included 45p for every business mile.
Then my wife, employee, paid the expenses from the business account into my current account.

If you are a sole trader get an personal account just for the tutoring and do the same with expenses. Fill out a claim form and transfer it to your normal bank account. Set up a side savings account and transfer 20% of everything that comes in across to meet the future tax bill. Then everything to do with the "business" goes through that account.
Once you take off costs, you will have more than enough in the side savings account to pay the tax.

[Simpo Two]

ChrisH72 said:

45p per mile is part of simplified expenses for self employed. There's a flat rate for all sorts of expenses you might claim. I can't remember when they brought that in. Years ago I used to claim a percentage of my total motoring costs so tax, insurance, maintenance, fuel depending on how much I used my car for work. But it was complicated and when you sell the car you can get stung for tax if it goes for more than HMRC think it should be worth. The flat rate is much easier. You definitely can't just put down whatever you like though as the revenue could question it, and nobody wants that hassle.

That's a fair summary. Like you I did the full thing but had somebody to do the actual numbers and tax return for me.

I expect you could do both - charge for mileage on the invoice (clients can hardly expect you to drive 70 miles for free) AND claim 45p/mile. But as said, if you're not paying tax there's nothing to reclaim...

[ChrisH72]

Simpo Two said:

I expect you could do both - charge for mileage on the invoice (clients can hardly expect you to drive 70 miles for free) AND claim 45p/mile. But as said, if you're not paying tax there's nothing to reclaim...

You absolutely could and should charge extra. I don't know how long the tutoring session is but 70 miles sounds like at least an hour and a half in the car. £32.50 expenses doesn't really cover that.

[silentbrown]

Simpo Two said:

I expect you could do both - charge for mileage on the invoice (clients can hardly expect you to drive 70 miles for free) AND claim 45p/mile. But as said, if you're not paying tax there's nothing to reclaim...

Absolutely - you can charge the mileage to the client at whatever rate you like - £5/mile, even. But you can only offset 45p/mile against your profit.