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Posted Mon, 23 May 2022 15:20:10 GMT by Stuart McAlpine
Hi, I recently bagan teaching English online in October 2021 on a teacher market place website. I had been earning money on it since that point, however I never withdrew any monies until after 5 of April 2022 tax year. At which point the payment receives fees and is changed from USD to GBP. Does the definition of trading only start when the monies were withdrawn or when I actually started to teach? I will be using using Cash Basis accounting. Therefore should I submit a £0 tax return for my self-employed business for 2021-2022 or should I submit my first self assessment next year for 2022-2023 and not submit one for 2021-2022? I would like some clarity on this please If anyone can help. Thank you.
Posted Wed, 25 May 2022 15:35:42 GMT by HMRC Admin 10
Hi
Please see guidance here on cash basis:
Cash basis: overview
Reporting will be determined based on when money is received as payment, not when you take the money from an account.
If you have been paid in the 21/22 year then this will need to be reported as such.
Thankyou.
Regards.
Posted Thu, 26 May 2022 09:50:05 GMT by Stuart McAlpine
Thank you for your response, much appreciated. This will mean my income for the 2021 - 2022 will be less than £1000. Lessons are paid into the teaching platform in USD and no daily conversion to GBP is calculated at time of student payment on the platform. The exchange rate is only applied when withdrawn from Paypal and fees deducted. If I am to calculate the taxable income in GBP at time of student payment which exchange rate do I need to use since one isn't provided by the platform at time of payment? Do I need to find a list of day end exchange rates and calculate this myself? Thanks Kind Regards
Posted Thu, 26 May 2022 10:48:16 GMT by HMRC Admin 10
Hi
You can use a monthly or yearly spot rate from using the exchange rate calculator on:
Exchange rates from HMRC in CSV and XML format
Thankyou.
Regards.
Posted Thu, 26 May 2022 19:16:47 GMT by Stuart McAlpine
Thanks, extremely useful. Final question. There is 15% fee taken off each lesson from the platform. Can I confirm that the taxable amount is (Payment Received minus 15% Charge), as this is the profit? Thanks Kind Regards
Posted Fri, 27 May 2022 14:21:19 GMT by HMRC Admin 30

Hi,

You can find guidance on how to work out your profit here:

How HMRC works out trading profits and non-trading income for the Self-Employment Income Support Scheme

Thank you.

Posted Sat, 28 May 2022 08:53:50 GMT by Stuart McAlpine
Hi, Thanks for the response, however I don't believe that link cover's my specific question: Is the lesson fee on the platform an expense? i.e. profit = student payment - lesson fee. I'd like to double check, as the student payment can never be realised as income due to this fee. Thanks Kind Regards.
Posted Sat, 28 May 2022 14:52:15 GMT by Stuart McAlpine
Hi, I read these fees as being covered as "professional membership fees, if you must pay the fees to be able to do your job" https://www.gov.uk/tax-relief-for-employees/professional-fees-and-subscriptions Is this correct? as I cannot teach a lesson without being charged the fee Thanks Kind Regards
Posted Tue, 31 May 2022 07:52:41 GMT by HMRC Admin 17

Hi,
 
If you are self-employed can deduct these fees incurred “wholly and exclusively” for their business where it maintains or

updates existing skills but not when it introduces new skills.

Thank you.
Posted Tue, 31 May 2022 09:54:42 GMT by Bella Boo
Hi hmrc admin. I think there's some confusion. The poster isn't asking if he can deduct for training/qualifications he undertakes himself. He is saying he has to pay the platform a commission (on his earnings from tutoring). @stuart, I'm not hmrc but I think the link they meant to provide the first time was a different link, on how to calculate profits of a business. I don't know the exact page, but I think you might find it helpful to bookmark the manual index page: https://www.gov.uk/hmrc-internal-manuals/business-income-manual
Posted Tue, 31 May 2022 12:39:46 GMT by Stuart McAlpine
Hi, If the following is the restriction: "34(1)(a) 54(1)(a) No deduction for expenses not incurred wholly and exclusively for the purposes of the trade. BIM42100 onwards" The platform fee is charged for the purpose of trade. i.e. teaching services and time. Which is charged exclusively for this trade. Therefore I read it as being deductable and not classed as a restriction. I need to pay it to trade. Could someone please confirm if this is correct? Thanks Kind Regards
Posted Wed, 01 Jun 2022 11:49:17 GMT by HMRC Admin 30
Hi, 

Yes you can claim this as an expense at it meets the conditions of being wholly and necessarily for your trade

Thank you. 
Posted Thu, 02 Jun 2022 08:30:15 GMT by Stuart McAlpine
Hi, Great, thanks you so much. That is all my questions answered. Kind Regards, Thanks

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