Self Employed Dog Walker or Dog Sitter? We’ve gone barking mad and put together this tax advice guide just for you. So whether you are just starting out in the Doggy Day Care World or have been Dog Walking for a while now, here is some useful advice to help you understand your responsibilities, how much tax you need to pay and how you to reduce your tax bill.
Direct Line Pet Insurance published a survey in 2015 stating that a successful dog-walker could walk approximately 13 dogs per day and comfortably earn more than the national average salary of £22,000 – proof that a career in Dog Walking or Dog Sitting can be financially as well as emotionally rewarding.
How to Become a Self Employed Dog Walker
If you would like to become a dog walker or dog sitter, then going self employed is the easiest way to get started. When you are self employed you are responsible for your own taxes and national insurance (unlike if you were employed in a job and issued with a payslip each month showing your pay and deductions).
The simplest way to register as Self Employed is to visit the HMRC website and register online. The process can take 10 days to complete upon which HMRC will post you a UTR number (Unique Tax Payers Reference). Keep this safe as you will need this code to file your Self Assessment Tax Return.
Once self employed you must then:
- Set up a bookkeeping system that keeps a record of all your income and expenses, as well as filing all your receipts;
- Complete a Self Assessment Tax Return by 31 January each year summarising your business income and expenses;
- Pay any Tax due by 31 January each year (and payments on account by 31 January and 31 July each year).
Your tax return submitted by 31 January covers the previous tax year (a tax year runs from 6 April to 5 April). So for example, your tax return due by 31 January 2018 details your earnings between 6 April 2016 to 5 April 2017 and this will detail your income from Dog Walking and dog sitting as well as any other earnings you may have (such as from other rental income, bank interest or dividends).
Here is a sample Tax Return and Sample Self Employment Section which would need to be included for Self Assessment. These are samples, you will need to submit your own Tax Return online.
It is also worth noting that if you already complete a Self Assessment Tax Return, for example because you collect rental income or have savings interest, that you need to complete a Form CWF1 to notify HMRC that you have a new form of income you need to report on. Again, you can do this online here and you will need your Unique Tax Payers Reference.
When Should You Register with HMRC as a Self Employed Dog Walker?
You must register with HMRC as self employed as soon as possible after starting work as an Dog Sitter but HMRC rules are that you must register by 5 October in your business’ second tax year.
However if you are newly self employed and expect that your gross income will be less than £1,000 in your first year, you may be entitled to the £1,000 Annual Tax Allowance for traders meaning you don’t need to register and declare your income. Check the criteria to understand your eligibility and whether this allowance is the most tax efficient solution for you here.
How Much Tax Do You Pay as a Self Employed Dog Sitter?
When you are self employed you pay tax based on your profits of your work (all your income less all your costs) and the amount of tax you pay depends on how much profit you make. Self employed individuals are also required to pay Class 2 and Class 4 National Insurance, which is again dependant on your profits.
How to Work out Your Profits
You need to add up all your income from Dog Sitting and Dog, which includes all cash payments as well as bank transfers, then deduct all your expenses as a dog sitter.
Self Employment Expenses for a Dog Sitter or Dog Walker
You are allowed to deducted expenses from your income before working out your tax – these are known as Allowable Expenses. It is really important that you keep a note of all your expenses because you don’t want to miss out on any since they reduce your tax bill.
Here are some typical allowable expenses for Dog Walkers and Dog Sitters:
Having a company website and a social media presence is a great way to position a dog walking business and target dog owners who are too busy or unable to walk their dog themselves. A good website should include a clear description of services, a price guide, location and contact details. The cost of setting up, managing and hosting such a website is an allowable expense.
You will no doubt need a computer & printer for research, to manage your bookings, website, print out leaflets/brochures about your services and share your photos on social media. Your computer and printer will be tax allowable either in full or a proportion of its value, so make a note and keep the receipt to discuss at tax time.
Phone & Internet
The cost of a business phone (landline or mobile) and internet is an allowable expense, however if there is personal use then only a proportion of the costs relating to your business can be claimed.
Most dog walkers will meet dog owners while on the job – Catch them while you can and give them a business card, they might need you one day.
Dog food & Bowls
Our little K9 friends like their food as much as us humans. The cost of feeding them and treating them is of course a business expense, even if it’s something which is then passed on to the dog’s owner.
Falling under the business equipment category, dog leads are an obvious item that dog walkers and dog sitters will regularly need and use.
Items like walking boots and outdoor clothing will both be necessary for a dog walking champions. While we doubt you’ll be rolling around in the mud too, a little protection from the elements is always a good idea. Savvy investment and one which is a claimable business expense. Dual use items are more complex and should be avoided, but if you choose to wear a branded t shirt then this will be fully allowable.
Keeping a log of personal and business mileage is a necessity if you are going to want to forward a successful claim for allowable mileage expense. As of now, HMRC’s mileage rates say that the first 10,000 business miles can be claimed at a rate of 45p per mile and 25p per mile thereafter. The rate covers the cost of fuel, servicing, tax, MOT and depreciation of a vehicle. Parking charges are also allowable, parking fines are not!
If you are picking up dogs, a van may make your life easier and keep the dogs more secure as well as increase the number of pets you can pick up at a time. Buying a van under these circumstances would mean it was a business asset and meet the criteria for 100% capital allowances in the first year. This means you can claim the full cost of the van against your taxable profit in the year you buy it. You can claim for fuel, insurance and maintenance costs of the van, although this may be adjusted for any private use.
Use of Home
If you choose to work from your home then there are rules that will allow you to claim either a flat rate each week or an amount for the running costs of doing so from your home as a portion of your household bills such as gas, water, electricity or rent.
Dog Walker or Dog Sitter Insurance
If you have taken out an insurance policy to cover loss, damage negligence etc you will be able to claim this cost as an allowable expense.
Any marketing you do, flyers, business cards or paid ads are also fully allowable expenses so make sure you download your receipts ready for tax time.
Accounting & Bookkeeping
Keeping accurate business records will help to avoid missing any entitlements or tax relief that you may be eligible for. My bookkeeping spreadsheet is perfect to help you organise your business finances and it comes with a handy guide to help you get started as well as advice on your regular bookkeeping tasks and a built in tax estimator.
If you buy a bookkeeping spreadsheet and use an accountant to help you complete your self assessment tax return, then all these costs would be tax allowable.
It is advisable to open a business bank account and keep your business and personal expenditure separate. The bank charges you pay on your business bank account will be treated as an allowable expense.
Recording Your Business Transactions
You will typically be paid in cash bank transfer or by card if you choose to offer a card payment service like Sumup. Like any self employed sole trader, it’s important to keep accurate business activity records and store receipts that support all your business expenses. Doing so will make life easier when the time comes to completing your self assessment tax return and claiming for any allowances/reliefs that you are entitled to. Incomplete or inaccurate records will demand more time and hike up any accounting costs and can result in fines from HMRC.
When you are self employed using a spreadsheet to summarise your income and expenses is a straightforward, HMRC compliant way to record your business transactions especially with the introduction of making tax digital from 2019. Making Tax Digital will require most self employed individuals to maintain their bookkeeping digitally and report on their earnings quarterly to HMRC.