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Do you class yourself as self employed or an employee?

Discussion in 'Private tutors' started by tutor314, Nov 1, 2018.

  1. tutor314

    tutor314 New commenter

    I received this email today...

    If you are part of the Tutors' Association you may have already received this email.

    You may already be aware that The Department for Business, Energy and Industrial Strategy (BEIS) has launched a series of inspections into Tutoring Companies with the clear intention of saying that they fall under the Employment Agencies act 1973. A number of of business owners have reported that BEIS believes tutoring companies are akin to recruitment companies. As such, tutoring companies would be subject to the same legislation as recruiters, and BEIS intend to stop tutoring companies from handling, collecting or invoicing payments on behalf of tutors.

    In response, the tutors association has:

    1. Arranged to meet BEIS in early November so that they can more fully understand what lies behind this sudden interest and be in a better position to advise our members on what action to take.

    2. Requested that BEIS suspends its investigations until after that meeting.

    3. Gathered information for its members on the potential nature, severity and consequences of this inspection.

    A number of members have already been the subject of inspection and have found the BIES approach to be aggressive. If BEIS are successful in their contentions, it is likely to have a serious effect on the industry
  2. Skeoch

    Skeoch Lead commenter

  3. doctoryes

    doctoryes Occasional commenter

    Most agencies expect the tutors themselves to collect payments and pass on a percentage commission to the agency.
    I did once work for an agency that took payments directly from clients and they treated me an an employee for tax purposes with payslips etc. This was in the early 1990s. So surely if large agencies followed this model that wouldn't be a problem with HMRC.
    However I tend not to work this way now as I find most of my clients myself.
  4. tutor314

    tutor314 New commenter

    Thank you for replies. I'm interested as considering running a tuition centre, would tutors rather be classed as employed or self employed?
  5. Jolly_Roger15

    Jolly_Roger15 Star commenter

    Some agencies still do something similar but insist on paying through an umbrella company, which often reduces your net rate so much, it is hardly worth bothering.
  6. dz651

    dz651 New commenter

    There are at least two tutoring agencies that I know of that employ tutors and in most cases the tutors work for them directly.

    One of my friends is a tutor who freelances and she was concerned whether get 15 to 20 clients will have to become her employers?! She doesn't work through agencies.
  7. dz651

    dz651 New commenter

    I think employed by you in the case, but not sure.
    I have known even agencies employing tutors, but in most cases the tutors were working exclusively with the clients of that company, so weren't freelancers.
  8. catbefriender

    catbefriender Lead commenter

    Most likely. You would be expected to pay PAYE and NI and tutors who were limited companies would have to organise payment of such via an Umbrella Company.
  9. catbefriender

    catbefriender Lead commenter

    Not really but if she was working 15 - 20 hours for one client exclusively, could be seen as so. HMRC are after money. I rang up the IR35 Helpline and was told that all employment via a recruitment agency was subject to PAYE and NI deduction, hence I prefer to avoid working through agencies and work through private clients. Once an agency is involved, it is complicated because the nature of the employment status is contingent on the End User/Client and the Middle Man's (agency) contract. So unless you have access to exactly what the Agency and Client have agreed, if the agency is considered an employee of the client, then you are automatically an employee of the agency.

    This is why some very intelligent organisations have PAID tax law expert to ensure all contracts between themselves and clients, tutors etc are clear so that in the event of any audit by HMRC, it can be proven that the tutors are in fact self employed.

    The implications of agencies being subjected to pay all tutors PAYE means agencies will have to pay employers' tax and NI plus holidays and pension contributions, tutors will have to pay employers' tax and NI, plus holidays and pension contributions. The clients of course will not pay more, so the money will have be be deducted from the money they get.

    How it has been arranged by many tutoring agencies is that the tutor pays both the employers and their own obligations from their hourly fees. Hence the system could be grinding to a halt as if you are being paid £25 an hour, as @Jolly_Roger15 has intimated, you could end up paying the employers' and your own liabilities plus a WHOPPING umbrella company's fees and be left with very, very little.:eek::(

    Employees have to be incentivised to work well. FACT!

    On the plus side, the FAT CATS i.e agencies, will be losing weight and end users will be looking for more avenues to work directly with tutors. RESULT!:)
    Mrsmumbles likes this.
  10. catbefriender

    catbefriender Lead commenter

    Forget to mention, if tutoring agencies are considered by HMRC as having to be subject to paying employers' PAYE, NI, holiday pay and pension contributions and their employees the same, then the agencies will be FINED and have to pay it up front and then both the employers and employees back liabilities will have to be paid. Ouch!:eek:

    Of coursed the tutors will have to pay their own liabilities, but I bet you the agencies will try and wrangle their liabilities out of the tutors.

    A MASSIVE mess is brewing.:oops:
  11. tutor314

    tutor314 New commenter

    Thanks for detailed replies and from what I've been reading it looks to make more sense to make tutors employees of a centre. I guess that might put some off, but also may encourage others.

    Would love to hear from anyone who has or currently is working in a tuition centre.
  12. catbefriender

    catbefriender Lead commenter

    All the contracts I have been offered in tuition centres, which I have turned down were all for payment via PAYE or via my setting myself up as a Limited Company and using a UC. If you have the infrastructure to make the deductions then it's easier to go for it, but it just means that you have to factor in MORE expenses into running the tuition centre.

    As someone said on this forum before, it's best not to try and make money off other tutors' backs. And I agree with him.

    What would be a good idea is having a centre and having other tutors sharing the payment of the rent and organising their own thing in separate rooms or in areas of the room (if it's a large hall etc). You would have to find a committed team of tutors and all the tutors would have to do their own lesson planning, marking and marketing, collection of payment themselves. Probably wouldn't work either as if one tutor pulls out, after a term, then you would have to find another tutor to pay that percentage of the weekly rent.

    As soon as one person employs a group of others and has them frequenting a site regularly, HMRC gets creative.:rolleyes:

    Too much hassle.
  13. tutor314

    tutor314 New commenter

    I sense you are very much against tuition centres. However, small family run business are not usually out to make money off of other peoples backs. I'm not really sure where this comes from. I personally don't see the point of introduction websites...I have never needed to use one as once I left teaching I had already earned an excellent reputation in the local area. However, I know a lot of tutors rely on these sites. I also know a lot of teachers/tutors that don't enjoy travelling to students homes but also don't want students coming into their home or they don't have a quiet office space, young children running round etc.
    Yes running a centre looks to be a huge hassle, probably not worth the minimal profit made- as you say I can see HMRC are clamping down, I would guess that's why not everyone goes for it. However, I can see that it would be a great asset to a city to have a well run centre, filled with excellent tutors for all subjects. A nice friendly environment to work from having other teachers/tutors to discuss with face to face. Nothing good comes easily.
  14. dz651

    dz651 New commenter

    I think mostly 2 hours or 1 hour a week with most people, sometimes once a fortnight in her case.

    Does the BEIS issue only relate to tutors working through agencies or even those who advertise themselves and deal directly with numerous clients?
  15. catbefriender

    catbefriender Lead commenter

    If you tutor through an agency it is more likely to be investigated especially if you get all your work through them. What it basically comes down to is the nature of the contract that has been signed by the agency and the End client and the agency and the tutor. The problem is, most agencies aren't run well and because they are sloppy, and most agencies have not invested their OWN MONEY in getting their contracts checked by qualified tax experts to insure they fall outside of IR35, therefore they may be putting themselves, their clients and their tutors at risk of having to pay an unnecessary tax liability as well as fines. The HMRC wants to increase its revenue. Agencies make mega bucks.
  16. dz651

    dz651 New commenter

    I personally don't tutor through agencies because I advertise for clients myself and have a website, etc, but know quite a few former school teachers who are registered with a number of agencies.

    The Tutors' Association survey doesn't quite indicate whether this issue only relates to those who tutor through agencies or to all self-employed tutors as a whole though.
  17. catbefriender

    catbefriender Lead commenter

    If you work freelance you're probably outside of IR35 but it's always best to seek professional advice.
  18. har1her1

    har1her1 New commenter

    This thread has made me think. I tutor through an agency. However, I have no contract of employment and I am classed as self employed. I take the fee from students and pay the agency commission, although once or twice the agency has taken fees directly from students and paid me once tuition is delivered.
  19. TheLondonTutor

    TheLondonTutor New commenter

    I consider myself to be self-employed because while I do get some agency work I get it from multiple agencies.

    Freelance private tutoring isn’t too dissimilar to a plumber or electrician in terms of getting clients, getting paid etc.
  20. Kateray1

    Kateray1 Occasional commenter

    Self employed. Registered with HMRC.

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