Personal fitness trainer? Let’s face it, watching your client jump up and down doing burpees is a little easier than completing your annual tax return. But when the time comes and you decide to review your tax responsibilities, liability and assess your record keeping skills, it pays to know the facts. We have put together this guide just for you whether you are considering starting a new career or just want to understand a little more about allowable expenses.
Register with HMRC as a Self Employed Personal Trainer
Whether you are offer bootcamp classes in your local park, use a local gym or go to clients homes going self employed is the easiest way to kick start your career as a personal trainer.
First things first, you must register with HMRC to let them know you are self employed and you can do that online here. Once completed you will receive a UTR number (Unique Tax Payers Reference). Your UTR is important so keep it safe, you will need it to file your Self Assessment Tax Return.
As you are self employed you are required to pay tax under Self Assessment which means you need to submit a personal Tax Return by 31 January each year detailing your trading income, the income tax and Class 2 & Class 4 National Insurance due as well as making a payment for the tax and NI due. Your tax return submitted by 31 January covers the previous tax year for example: your tax return due on 31 January 2018 details your trading income earned between 6 April 2016 to 5 April 2017.
Watch out, you are also required to make a payment on account to HMRC by 31 July each year too which is normally 50% of your previous years tax bill, so make sure you budget for this additional payment too.
Your trading income, somewhat deceivingly, actually means your trading profits (all your income less all your allowable business expenses). Generally speaking, business expenses are only tax allowable if they are ‘wholly, necessarily and exclusively’ incurred in the performance of your business. All expenses must be supported by a receipt, so make sure you keep hold of all your paper or emailed receipts. But it is really important to be aware of which expenses are allowable because they will reduce your tax bill and incorrect claims can result in penalties.
Allowable Start Up Expenses for Self Employed Personal Trainers
Starting any business usually involves some element of cost so it is worth understanding whether these expenses will attract tax relief before you start spending. Here is a list of typically allowable start up expenses relevant if you are a self employed personal trainers:
You may need to invest in items such as boxing gloves, skipping ropes or weighing scales for your training sessions. These are fully allowable so keep all the receipts of your equipment so you can discuss deductions with your accountant.
Computer & Printer
You will probably need a computer & printer to manage your bookings, make product orders, manage social media or print out leaflets/brochures. Your computer and printer may 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.
Having a website is so important and it gives you the chance to detail your services, prices, showcase your previous work and let people get a feel for your experience and personality. If you are considering investing in a website then it is worth noting that the website, domain and hosting again are all allowable expenses.
Allowable Ongoing Expenses for Self Employed Personal Trainers
Once you have begun finding clients you will being to incur expenses on an ongoing basis as you run your business. Here are some of the ongoing expenses you which you should look out for as a self employed personal trainer and keep details of as they are generally tax allowable and reduce your tax bill:
The cost of additional gym equipment you buy to expand your range of services are fully allowable, whether it is a punch bag or skipping rope. If equipment becomes worn out and needs replacing, the cost of the replacement items are fully allowable so always remember to keep your receipts somewhere safe ready for tax time.
Phone and Internet
The cost of a business phone (mobile and/or landline) and your internet is an allowable expense however if there is personal use then only a proportion of the contract costs can be claimed.
If you have a ‘uniform’ with your logo that you wear while you work, then you should be able to claim for this cost. Normal clothing is not allowed and neither is the cost of washing your ‘uniform’ at home.
If you offer home visits to your clients home you will incur the cost of travelling to your clients. Keep hold of your receipts for trains, tubes or taxis as they should all be allowable expenses and help reduce your tax bill.
If you use your car to travel to your clients you should note down the mileage as this falls under the category of travel. Record you miles to and from your destination since you can claim 45p for the first 10,000 miles of driving and 25p thereafter.
Note – If you choose base yourself at a particular location, like a local gym, you may not be able to claim for the cost of travel/mileage as this may represent your permanent place of work. Make sure you take professional advice before claiming for travel/mileage as incorrect claims can result in penalties.
You may be required to take out some form of insurance to cover injuries. Again you will be able to claim this cost as an allowable expense.
If you opt to work out of a gym to take advantage of equipment, then again the cost of doing so is an allowable expense and will reduce your taxable income.
Use of Home
If you choose to work from home and have set up a dedicated gym area then there are rules that will allow you to claim 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. 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.
You may opt to take courses to improve your skills or learn about new training routines. These may be tax allowable so keep your receipts ready for when you need to submit your tax return. If you need to travel to your course or stay overnight as part of the training these costs are also tax deductible, as well as the cost of a basic meal for lunch/dinner. Take the time to collate your receipts or note down mileage so you can discuss your claim against your taxable income with your accountant.
Any marketing you do (online or offline), paid ads or anyone you pay to help you with your marketing is also fully allowable so make sure you download or ask your marketing assistant to send you an invoice before you pay them.
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. Keeping accurate records will definitely help keep their fees down too as well as giving them all the information they need to make sure you receive all the deductions and reliefs to reduce your tax liability.
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 is an allowable expense.