One of the biggest requests we get from customers is to make payments to tutors easier; running payroll can be one of the most time consuming tasks.
With our new Split Payments feature, tutors are paid automatically as soon as your client pays without any input from you!
What is the ‘Split Payments’ feature?
Split Payments is our name for the feature that splits payments instantly between the company and tutor at time of payment. For example, Ms Jones is being charged £65 for a lesson, with the tutor being paid £40. When Ms Jones makes her payment, the tutor receives £40 and the company receives £25, without the tutor’s money ever sitting in the company’s bank account.
Why have you built this/how is this affected by the recent high court ruling concerning BEIS?
Recently, the High Court ruled that it is illegal to be in control of the compensation due to tutors (self-employed or otherwise) that you introduce to clients unless your company (and not the tutor) is providing the tuition service – in which case you have to charge VAT on the tutor’s part of the fee in addition to your commission.
In layman's terms, this means that if you want to act as an Employment Agency, with your tutors acting as self-employed contractors, you must not be in control of the money they are receiving. You cannot collect money from the client, then pay it on to your tutor.
Further details on the 2020 High Court ruling EWHC 2461 can be found here.
The Split Payments feature complies with the above ruling, by removing the necessity for the tutoring agency to ever handle money. Compensation is split between tutors and the agency at the moment of payment, all need for control over funds is removed.
In addition to complying with the above ruling, Split Payments will also make tutor payroll operations and costs obsolete. Tutors will collect their earnings when the client pays, so there won’t be any more need for managing monthly bank transfers. Even if you’re not a company that acts in a way that would be affected by the ruling, this feature will make receiving money and paying tutors much easier!
It’s important to note that, as this ruling shows that an agency cannot control the compensation being received by the tutor, taking prepayment for lessons is not possible.
Do all my payments have to be processed this way?
We advise that any work you do that involves a tutor as a self employed contractor, teaching a private client in the UK, is done through Split Payments, as it seems to be the only legal route.
We understand that a lot of work falls outside of this workflow, such as teaching in schools or LEAs, in which case you can choose whether to use Split Payments or not.
How does it work?
It's really simple. You sign up to a Stripe Account from within TutorCruncher, and ask your tutors to do the same.
Once that's done, you're ready to go! You can start taking payment by card right away.
Our guides can be found