10 Amazing Expenses
When self-employed, the perks are few. There’s no sick pay, there’s no holiday pay, and after a year of hard work you are rewarded with a big old tax bill. In the gig economy, while the emotional and spiritual advantage is that you can be your own boss, the trade-off means that the costs of running your business are necessary, yet eat away at your profits like Pac Man at an all-you-can-eat buffet; that is to say, they never end.
Now don’t fret! There are many self employed allowable expenses that can help soften the blow of the tax bill at the end of the year. These can greatly improve your life—and I’m here to list my favourites! But first…
What are Self Employed Allowable Expenses?
Self employed allowable expenses are the costs of running your business as a private tutor that can offset the value of your cash takings and your end-of-year profits. This is important because Her Majesty’s Revenue and Customs (HMRC) tax your Profits—not your takings. So it’s beneficial to know that if you spent money during the year on something you needed to run the business with that you don’t have to pay additional income tax on top of the value added tax (VAT) you already paid to get it the first time around! There are different kinds of self employed allowable expenses and there are rules around what you can write off as an expense.
For example, if the thing you bought is a vehicle or tool you use to tutor with that has a life expectancy of greater than two years (e.g. a car, motorcycle, office furniture, computer or video equipment), then this is not an expense—it is capital and needs to be treated differently (For that, check out our blog A Capital Idea, Old Prof!). An expense must have a usefulness of less than two years and have involvement in the running of your business.
Lastly, most tutors don’t own their own offices, they rent. Therefore, almost all things that are self employed allowable expenses could be used partially for personal use. You need to assess a percent of how much your expense is business use and how much is personal use. The percent of how much is business use is what you write off as an self employed allowable expenses.
Get your calculators out!
A good example is if you bought a ream of paper consisting of 500 sheets, and you used 400 sheets for printing business invoices. Then the other 100 sheets for printing SPSS outputs for your personal research. You can then write off 80% of the ream of paper. If the ream of paper cost you £2.50, 80% of £2.50 is £2.00. So you can write this amount off as expense. To learn more about the specifics of expenses, check out our blog on The Taxing Nature of Tuition for more details. Now, onto the list!
As a tutor, textbooks are invaluable to the nature of my work. I have hundreds of them. Sadly, every time I meet a new student, they’re all using a different textbook! Even more maddeningly, When the government up and decides to change the curriculums, that means I have to buy all the same textbooks all over again! Over the years I have spent thousands on textbooks! Fortunately, textbooks change and wear out very quickly so this is a great expense write off. Furthermore, if what you’re selling is your own intelligence, that means any academic book can technically be part of what you are selling, so consider expanding your library, your tuition repertoire and your expense account for books!
Websites are tricky, but expensable. When I started out, I did not want to have an expensive website because I knew it was likely not going to attract a lot of business. So I built the website for free from Blogger.com and paid for a domain name from Namebargain.com. It was tough for a non-technical person like me. But I managed to hook them up and for less than £15 per year, I had a tutoring website that did the trick! Now, the website may not attract many customers, but it is useful for people who have hired you through the company and want to get to know you a bit before they meet you in real life.
It also brings a certain amount of credibility to your business as a sole-trader. In other words the website was more useful reinforcing a client relationship after I met the client by other means. Furthermore, to my surprise my website did attract me work over the years. I had a sixth-form call me out of the blue from my website to lead revision classes for their psychology students and I had a few uni students find me from the website. I would say for me, my website has always turned a profit and served me well. Now how much you want to spend on your website is up to you, you can write it off as an expense so consider your needs before you buy.
Once in awhile, there is a job you just can’t do! For example, I don’t know how to use Photoshop, so when I need images made for my website, I can’t do it myself. I can’t fix my motorcycle when it breaks down. I also occasionally go on business trips (more on that later) and I have tuition clients who cannot afford to miss a session. In this situation, you can hire a subcontractor to do the work for you. so long as the client agrees this is acceptable. Anytime you have some work needing to be done that impacts how your business runs, you can hire a subcontractor to do the work for you or on your behalf.You can write this off as an expense. If you look at my Free Expense Spreadsheet these can usually be listed under Professional Fees.
Tutor Tax Expense Spreadsheet
Lunches are a great perk to being a tutor so long as you are a tutor that meets the criteria. The rules around “subsistence allowances” state that a person can write off a “reasonable” amount in lunches if they are a sole trader and travel as a regular part of their employment. These rules mean only certain tutors can take advantage of this perk. Lets consider the cases of Tavis, James, and Mary:
Tavis is primarily an A-level psychology tutor. The fee payers for this tuition are usually the parents of teenagers. They usually feel more secure when tuition takes place at their home. So Tavis has to travel around to several students’ individual homes in a day to conduct tuition. As Tavis is a sole trader and travels to meet clients, he can write off a reasonable lunch as an expense.
James is primarily a university-level chemistry teacher. He works for The Profs as an online tutor and sees clients via BitPaper and Zoom from his home office. James is a sole-trader, however, he does not travel to clients homes. Therefore he cannot write off lunches as an expense.
Mary is a university-level English tutor who sees clients at home and online. However, she tutors through a tuition centre, rather than as a sole trader. She travels between home, her office and clients’ homes. However, because Mary works through a limited company, she cannot write off her lunches as an expense.
5. Travel Expenses
You can write off travel expenses as part of your tuition. The problem is that this definitely gets complicated as you go—especially if you use your own vehicle. So let’s start simply.
If you do not own a vehicle and you see clients on public transportation, you can write off the tickets you use to travel as an expense to see clients. If you live in London and use Oyster pay-as-you-go, this is quite easy.
However, if you hit the travel cap for a week, then it gets complicated because you have to justify the percent of how much travel was business and how much was personal.
TOP TIP! The percentages are nearly impossible to work out and is a massive waste of time because travelling likely changes week to week. The easy get around here is to have one Oyster Card/Contactless Card for business travelling and a separate one for personal travelling. Then you can justify writing off 100% of your travel with no muss-no fuss!
You might be able expense your vehicles!
Vehicles can be tough and will vary on a tutor-by-tutor basis. For example, did you own your car before you were self-employed? If yes, then you can’t write the car itself off as capital, but you can write off some of the mileage and petrol as an expense. If you bought a car specifically for the business you can write the car off as capital and you can expense all of the gas and costs of running the car (including repairs and MOT). But if you use it at all for personal use, then you need to acknowledge that. Further complicating matters, what are the Co2 emissions of your car? That matters too! It’s a tough explain for a short blog, but this video from HMRC and FreeAgent does a great job explaining it!
Also, your car and motorcycle mileage rates can be found here.
A big expense is travel and writing it off is possible. If you need more information about your personal circumstances following this blog, consider contacting a tax advisor or bookkeeper to explain to you what you can do. Yes, their fee can be an expense too!
6. Business Trips
Following on from Travel Expenses, Business Trips are a great little perk of being a tutor! One of my favourite tricks — er, I mean business strategies — is to consider where I have to travel to for personal reasons, and scout a tuition opportunity when I’m there!
For example, my civil partner’s family is from Leeds. I went there a few years ago for a long Christmas/New Years Holiday period. In the down time of the holiday, I changed my tuition website and informed my company I wanted clients from Leeds for that period. Well they found me some! Because I conducted tuition while on my holiday, I can offset some of the travel cost. Note, I say some, not all! Remember it is a percent. So if I were away for 20 days, and I tutored clients for 4 days, then I’d be safe writing 20% of my train tickets to-and-from Leeds.
Another thing to bear in mind is that many tutors are academics as well, either currently studying or working at a university and tutoring in the evenings. Well if you travel to an academic conference and promote your research and your business—that means some of the conference expenses can be written off as well! Not all PhD students are like me, but as I self-fund my research, when I go to conferences I say I’m representing my business—not my university. Therefore, as I’m representing “The Tutor King” and not a university by actively promoting my business, I can write off the conference costs as self employed allowable expenses.
7. Mobile Phone
You can write off your mobile phone charges as a expense if you are using it to correspond with clients. However, similar to lots of things, if you use your mobile phone for personal use, then you have to actually spend time working out a percent. Yes, you can do it. But should you? No. This is a HUGE waste of your time that you can spend on generating income rather than recouping costs that are so small. The far easier thing to do is have two phones. One for work and one for personal use.
Or…. If you are SUPER SMART, get yourself a dual sim phone! I actually found a dual sim burner phone at ASDA. You will have no street cred for this (well, none that you want, I assure you). If you want to impress your friends, consider getting the very flash OnePlus 5. It is dual sim and can handle all the smart-phone apps that a tutor requires.
The key point here is that you can separate your business use from personal use which will make writing off self employed allowable expenses easy. For example, I have a dual sim phone. One sim is for business and the other is personal. Every month I go and buy two £10 pay-as-you-go bundles of minutes/data/texts for each sim. At the end of each month, I write off £10 in mobile phone expense. This helps save me money on my taxes and keeps the process simple.
Note: It’s up to you to explain why you have two phones to your partner or spouse. We will not fight this one for you. The Tutor King and The Profs take no responsibility for relationship issues arising from tuition business advice.
I hear what you are saying. Why the heck would a self-respecting academic who has shed the clothing of servitude (be it black polo-shirt or business suit) just to create one’s own work shackles? Well there is a knock-on effect that is quite useful.
First, the uniforms themselves are the sign of a professional tutor and a great ice-breaker. My clients love my branded shirts! When I meet clients for the very first time, I communicate a level of professionalism and presence that other tutors don’t have. Oh, NEWSFLASH: You are not the only tutor your client has ever had. Clients aren’t loyal—they tend to be regular tuition users across several subjects throughout an academic lifetime.
Point is, you’re not their first. But, you can be their best and my clients love and know exactly who The Tutor King is because the sweet uniforms communicate that I am the professional tutor who puts the needs of my clients first and not a moonlighting academic making money on the side who may have priorities or loyalties to their institutions over and above their clients (Apologies to all moonlighting academics making money on the side. You’re good people, too).
You cannot write your normal clothes off as expense because clothing is so nondescript, you can work or live in it. However, you can only reasonably wear a shirt with your company logo on it when you are working (although I like the idea of going to the Opera in a Tutor King shirt). So yes, you can write off the branded clothing.
There’s more than one advantage…
“So what?!?”. I hear you say. “I prefer my normal clothing and I’d rather not wear logos”. Well, the last benefit is that you can expense the cleaning bill on work uniforms, as well! Now, I hate ironing. No really, I hate ironing with the passion of 1,000 suns! But, by wearing uniform shirts and dropping them off at the cleaners, I can have the cleaning and ironing done for me and 100% expensable! If that doesn’t convince you of getting a tuition uniform, then nothing will! Also, look out for Number 10 on the list—this relates as well but first…
This list is not in order of my personal favourites. If it were, this would be my Number 1! My cleaner is my little reward in life for running a successful business. Despite Tavis’ Mom being hugely disappointed in me as a housekeeper (and to a lesser extent, his suffering husband), I hate washing dishes, doing laundry, ironing, putting things away. It’s a waste of a genius’ time. Let’s face it, at The Profs—we’re all geniuses.
Now regarding economics, let’s be real here. Let’s say it takes me six hours to clean my house after a weekend. I’m slow, and I hate it. But in six hours of time, I could have tutored between two-to-four hours and made upward of hundreds of pounds! Why clean for nothing? I could go and tutor. I could hire a professional cleaner and pay them £10/hour while I’m earning greater than £50/hour in the same time. Furthermore, a messy house impacts my business. I can’t bring clients back to a messy house. When everything is cluttered, I can’t find textbooks, keys, handouts—just about whatever it is I need that day. The cleaner is my MUST-HAVE expense!
Now, similar to rent – the cleaner can only be partially written off as an expense because I must accept her cleaning also is for my personal use. For example, my clients may use my sitting room. I may do lesson planning in my office. My clients may even occasionally use the toilet. However, clients never go to my bedroom and I never bring work into the bedroom!
Moreover, my partner shares the space so he technically benefits too. So I write off my cleaning as part of my self employed allowable expenses using the same formula I outline in A Tutor’s Home is Expensable, so check out that blog on the execution of this expense.
10. Cleaning Supplies
I saved cleaning supplies for last because Uniforms and the Cleaner both relate to Cleaning Supplies.
If you wash your uniforms at home, that means you can also partially expense your fabric softener and washing powder.
Furthermore, if cleaning supplies are the tools of your cleaner’s trade, and they make the house presentable for clients and/or maintain order in your home office, this that means the cleaning supplies involved can be partially written off too.
This means surface cleaner, washing-up liquid, toilet scrubbers, hand soap, the lot can all contribute as an expense. And as they say at a leading supermarket chain, “Every Little Bit Helps” when it comes to knocking down your profit level before you are taxed.
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Next: Hope you enjoyed this blog on self employed allowable expenses, why don’t you read our blog A Tutor’s Home is Expense-able! for help on expensing your home. Or you can read the complete guide on Paying Self Employment Tax as a Tutor