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 for 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.

Register with HMRC for Self Employment Online

What is a UTR number

From this point you must then:

  1. Keep a list and receipts of all your income and expenses;
  2. Complete a Self Assessment Tax Return by 31 January each year summarising your business income and expenses;
  3. Pay any Tax due by 31 January each year (and payments on account by 31 January and 31 July each year).

What are Payments On Account

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.

Tax Return Sample

Self Employment Tax Return Section Sample

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.

How Much Tax Do You Pay being Self Employed?

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.

Allowable Expenses for a Dog Walker
Allowable Expenses Reduce Your Tax Bill

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:

Business Website

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.

Computer

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.

Business cards

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.

Self Employed Dog Walker
Make Sure You Keep All Your Receipts, No Matter How Small.

Dog Leads

Falling under the business equipment category, dog leads are an obvious item that dog walkers and dog sitters will regularly need and use.

Clothes

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.

Mileage

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!

Commercial vehicle

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

There are rules that will allow you to claim an amount for using your home for dog sitting and overnight stays and the running costs of doing so.  This is a portion your household bills such as gas, water, electricity or rent. Make sure you have an idea of your household running costs to discuss with your accountant at tax return time as they will help you work out how much you can claim against your taxable income.

Alternatively, HMRC allows you to claim a flat rate of £4 per week for using your home for work purposes and you don’t need to substantiate this claim with receipts.

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.

Marketing/SEO/PPC

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. Using a cloud based accounting software such as Xero, Quickbooks or Sage will make life easier, so if you do choose to sign up the cost of the monthly subscription is fully tax allowable. Then, if you choose to use an accountant to complete your self assessment tax return, again their fees will be an allowable expense. It is worth noting that keeping your business records in order will help keep your accounting fees at a minimum.

Bank Charges

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

Dog walkers will typically be paid in cash or via bank transfer and, like any self employed sole trader, it’s important to keep accurate business activity records and be aware of any entitlements or tax relief that you may be eligible for. Doing so will make life easier when the time comes to completing Self Assessment. Incomplete or inaccurate records will demand more time and hike up any accounting costs and don’t forget that failure to declare all forms of income could result in prosecution and a fine from HMRC. Accurate returns are important as they affect a person’s eligibility and ability to get things like mortgages and other types of credit finance.

A simple spreadsheet which records your income and expenses is a great start to keeping your business transactions logged and organised.  You read some of our tips to keeping your accounts organised here.

Tax Advice Dog Walker Dog Sitter
Don’t forget to budget for your tax bill each month to avoid any nasty surprises at Tax Time.

How Much Tax Will You Pay

As you now know the amount of tax you pay is based on the profit you make from (all your income less all your allowable expenses).

However the amount of tax that you actually pay is based on your circumstances and how much you earn in total during a tax year.

Income tax is calculated at different rates according to how much your profits are.  So for 2017/2018 the rates are:

2017/2018
2016/2017
Personal Allowance
0%
Up to £11,500
Up to £11,000
Basic rate
20%
£11,501 to £45,000
£11,001 to £43,000
Higher rate
40%
£45,001 to £150,000
£43,001 to £150,000
Additional rate
45%
over £150,000
over £150,000

 

Example of Working Out Tax for a Self Employed Dog Sitter or Dog Walker

Phil is getting ready to submit his tax return for the tax year 2016/2017 which is due by 31 January 2018.  He has worked out that his profits from Dog Walking and Dog Sitting was £22,000 therefore he will need to pay tax of £2,200.

Phil will also need to pay Class 2 and Class 4 National Insurance as well as the tax above. The National Insurance rates are:

Class
Rates for tax year 2017/2018
Rates for tax year 2016/2017
Class 2
£2.85 a week
On taxable profits above £6,025
£2.80 a week
On taxable profits above £5,965
Class 4
9% on profits between £8,164 and £45,000
2% on profits over £45,000
9% on profits between £8,060 and £43,000
2% on profits over £43,000

In our example above, Phil earned £22,000 therefore would need to pay Class 1 National Insurance of £145.60 and Class 2 National Insurance of £1,254.60.

Phil’s total tax bill is therefore:

  • Income tax £2,200.00
  • Class 1 National Insurance £145.60
  • Class 2 National Insurance £1,254.60
  • Total for 2016/2017 £3,600.20
  • Payment on Account £1,727.30
  • Total to pay by 31 January 2018 £5,327.50

Whether you are already a sole trader or if you are considering becoming a sole trader it is important to budget for your tax and national insurance bill, one of the simplest ways is to set some money aside for HMRC as you get paid. If you are unsure how much tax you need to pay or of your tax status we definitely recommend you ask an accountant.

Cash in Hand Work: What You Need to Know