Paying tax on private tuition (in addition to working) - UK specific

Question

During my time at university, I've tutored several students to give me a small amount of income. I have in the past notified HMRC about this, however the amounts of money involved have been sufficiently small that no tax has been payable.

Next month, I'll start a full time job, but still plan on offering tuition of a weekend to a few of the students I've worked with over the last few years. In total, the amount I'll earn from this over the course of a year is less than £1500, but I would still like to declare this income.

All of the information I can find online relates to full-time private tutors, who are advised to register as sole-traders and submit self assessment tax records. What is less clear is what I do in relation to my job. Given that I'll automatically be paying income tax, how do I go about declaring my additional income? I'd ideally not like to declare this via my company, but equally I can't see any option for declaring this directly to HMRC.

Answer 1

You should still register as a sole trader/self-employed: see https://www.gov.uk/working-for-yourself

You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings.

How you actually declare the earnings to HMRC is via an annual self-assessment tax return. It's fairly straightforward for the situation you've described. If you’re filing online, you have a generous amount of time to get around to this – the hard deadline is 31 January following the 5 April tax year end (so 31 Jan 2020 for the year to 5 Apr 2019).

You will end up paying tax on the income at the marginal rate of tax you pay on your day job, or more if the income pushes you into the next tax bracket, so make sure you set aside that amount to pay the bill at the end of the year. So for example if you earn £20K in your day job you will pay 20% tax on the tutoring income. If you earn £11K then your marginal rate of tax is 0% but the tutoring income would push you over the tax threshold (currently £11850) and you'd pay 20% tax on some of it. (This is also further complicated this tax year because you'll only have a partial year's earnings to pay tax on - but if you set aside enough based on a full year's earnings, you'll be safe.)

You should also check if your new employer requires you to declare this side job, as many do.