A “tax year” is an annual accounting period for keeping records and reporting income and expenses. A tax year in the UK set by the government runs from 6 April to 5 April.

You have to register with HMRC when your turnover exceeds £1,000. This must be done by 5 October following the end of the tax year your income exceeds the £1,000 threshold. You will have to submit your tax return online by 31 January following the end of the tax year too.

Please see our blog: Registering for Self-Assessment (including class 2 contributions) for your PT business on how to register. 

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To work out your profits, the simplest explanation is you need to take your income you received during the year and deduct your business expenses from this. 

You must also confirm whether to use the traditional accounting method or cash basis.

In addition, you must choose a financial year end. The simplest year end is 5 April in line with the tax year to avoid issues on basis periods.

See HMRC’s website on Business records if you’re self-employed for further information.

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See our FAQ: “When do I have to register for self-assessment?” where the self employment registration thresholds still apply even if you are employed elsewhere.

If you earn more than the personal allowance (2021/2022: £12,570) from your employment, you will have tax due straight away on any profits you make from your PT business. 

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There are many expenses you can claim for. The most common ones are; Gym wear (with your own branding), gym membership, business mileage allowance, parking, professional indemnity insurance, gym rent, use of home allowance, accountancy fees, some training courses including CPD, mentors and business coaches, stationery and postage, website costs, marketing, software and app subscriptions.

Other expenses which are also allowable but may need to be adjusted for private use are actual car expenditure (if you’re not claiming mileage allowance) and mobile phone costs.

You can also include use of home if you do any work at home, this will either be the simplified version dependent on how many hours you work or you can look at the actual costs which is more detailed.

Please refer to our blog: Your Guide to Tax as a Personal Trainer where a comprehensive list of allowable expenses is explained.

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Yes, any equipment you buy that will be used in the business you can claim for. This will usually be through Capital Allowances if the value of the purchase exceeds £100. If you prepare your accounts on the cash basis, you will be able to deduct these within your profit and loss account instead.

Please refer to our blog: Your Guide to Tax as a Personal Trainer where a comprehensive list deductions is explained.

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You can usually claim for everything you are putting into the studio provided you are going to use it for business use. You may need permission to do the conversion depending on the type of property you live in and whether it changes the usage of the property. We would suggest getting in touch for more information prior to making any changes.

You need to keep track of business records to file taxes, measure profitability, and secure funds. Not to mention, you should always keep records handy in case of any investigation. Effectively you need to record all business transactions such as income, expenses, assets and liabilities. Some typically include:

• Copy of tax returns filed
• Employment records (P60/P45/P11Ds)
• Business bank statements (& business credit cards if applicable)
• Record of income
• Record of expenses
• Record of equipment purchased
• Business agreements (e.g., agreements with a gym)
• PT qualification & CPD record
• Licences & Insurance documents

To simplify the recordkeeping process, you may want to have digital copies, saved somewhere such as a Google  drive of Microsoft OneDrive. 

From April 2023, HMRC are requiring all businesses with turnover of over £10,000 to keep digital records. This can be a spreadsheet or software. Please see our FAQ: “What is Making Tax Digital (MTD)?” for further information.

You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. HM Revenue and Customs (HMRC) may check your records to make sure you’re paying the right amount of tax.

Example:

If you send your 2020 to 2021 tax return online by 31 January 2022, you must keep your records until at least the end of January 2027.

If you can save your records digitally somewhere such as a Google drive of Microsoft OneDrive, there is no reason why you can’t hold onto your records for this period of time or even indefinitely just to be safe.

Making Tax Digital is HMRC’s way to digitise the tax system. From April 2023, all businesses with turnover that exceeds £10,000 will have new quarterly reporting requirements. We suggest that you prepare for this sooner rather than later by keeping digital records.

The quarterly reporting system will be in real-time and due one month after the end of the quarter. This is going to be a huge change for everyone who falls within the scheme.

Please see our blog: Making Tax Digital (‘MTD’) for Income Tax – Personal Trainers Get Ready! for further information on this.

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Please see our blog: Self-Employed Personal Trainer – TAX and NIC for information on how your tax and national insurance is calculated.

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‘Payments on account’ are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).

You have to make 2 payments on account every year unless:

• your last Self-Assessment tax bill was less than £1,000
• you’ve already paid more than 80% of all the tax you owe, for example through your tax code or because your bank has already deducted interest on your savings. If you have an employment as well as your PT business, this may apply.

Each payment is half your previous year’s tax bill. Payments are usually due by midnight on 31 January and 31 July.

If you still have tax to pay after you’ve made your payments on account, you must make a ‘balancing payment’ by midnight on 31 January next year.

Example:

Your bill for the 2020 to 2021 tax year is £3,000. You made 2 payments on account last year of £900 each (£1,800 in total).

The total tax to pay by midnight on 31 January 2022 is £2,700. This includes:

• your ‘balancing payment’ of £1,200 for the 2020 to 2021 tax year (£3,000 minus £1,800); and
• the first payment on account of £1,500 (half your 2020 to 2021 tax bill) towards your 2021 to 2022 tax bill

You then make a second payment on account of £1,500 by 31 July 2022.

If your tax bill for the 2021 to 2022 tax year is more than £3,000 (the total of your 2 payments on account), you’ll need to make a ‘balancing payment’ by 31 January 2023.

Payments on account do not include anything you owe for capital gains or student loans (if you’re self-employed) – you’ll pay those in your ‘balancing payment’.

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Please see our blog: Your Guide to Tax as a Personal Trainer for information on VAT registration requirements.