Whether you’re self-employed or employed by a company, you will be paying tax as a personal trainer. Hopefully, that quickly answers the question “do personal trainers pay tax“.
Being an employed personal trainer has the perk of you not needing to keep check of every payment that’s made to you, or to keep receipts for everything you have bought for your business.
However, when you are self-employed, there are some seriously cool benefits to declaring your own income.
In this article, I will be explaining some of these benefits and what kind of tax you can expect to pay if you are an employed trainer.
Self-employed personal trainers will need to take account of their income and expenses so they can be declared at the end of the tax year. Employed personal trainers will not need to declare their earnings to HMRC as their employer will do this for them and deduct any contributions.
Tax is certainly one of the aspects that may put some trainers off becoming self-employed.
It can sound intimidating and confusing to a lot of people, so if you are employed, it’s much easier right?
Well yes, in a sense, if you are employed your tax situation will be no different than if you work any other day job. However, as I alluded to in the intro, there are some serious benefits to being able to declare your own income each year, and it doesn’t have to be that complicated at all.
Do I even need to declare my earnings?
If you are working as a self-employed personal trainer and are being paid directly by your clients for training sessions, then yes, you will need to declare your yearly earnings.
Does every personal trainer declare their annual earnings? No, but you certainly should if you don’t want to be lumped with an enormous fine or prison time due to tax evasion.
Some trainers will maintain that it’s a good idea to under-declare how much you have earned that year because you won’t get taxed as heavily.
This is still failing to properly declare your income and is likely to get you a hefty fine if you are found out, and also it makes it appear that you are only making a small profit each year.
Should you ever decide to buy a house, (or any other large purchase), you will struggle to get a loan or mortgage as the bank will see that your business is barely making any profit.
My advice here is to declare your income fully, don’t try and be clever by under-declaring or not declaring anything at all. You probably will get caught and it really won’t of been worth the small amount of money you avoided paying in tax.
How do I register?
You will need to register yourself as “self-employed” by heading to the UK Gov site and filling in their online registration portal. It’s a simple step-by-step process, and if I can do it then you certainly can, however, if you are really struggling, you can call them on 0300 200 3310.
Every time I called them they were very helpful, but there is usually a pretty long waiting time, so set aside half an hour or so to get through to someone.
Once you have got yourself set up, after a few days you will be sent through the post something called your UTR (unique tax reference) number, which is the number that links all the documents you submit to HMRC with your account.
I would advise that you set yourself up as soon as you have begun training people. You can technically wait a while as your income will not need to be declared for a while (depending on when you start trading), but in my view, it’s a better idea to get it all done and out of the way.
What do I need to keep track of?
Everything! Keep track of everything that you buy and all of the payments that are made to you from clients.
When you are self-employed, there are aspects of your business that the government knows that you need to pay for in order for it to be successful. They give you a bit of a break by letting you deduct these amounts from your yearly profit, so you only pay the tax on the profit that’s left.
Any expense you have that is necessary for your business to succeed is known as “tax-deductible“, and these can be declared along with your income at the end of each tax year.
You might not know what can and can’t be declared as a business expense, so it would be my advice to keep track of every item that you have purchased for your business and submit all of it. If it is not considered tax-deductible, the HMRC will let you know.
It is very important that you keep receipts for everything you have purchased, as the HMRC will want proof that these items have been purchased.
What can a personal trainer write off on taxes?
You would be absolutely amazed at what you can declare as a business expense for a personal training business.
I’ll add a small list here, but it is by no means an exhaustive list, there are plenty of others too.
- Computer equipment (if used for business purposes)
- Website (hosting)
- Accountants fees
If you do any work at home, it is possible to declare some of your rent/mortgages as a business expense.
I never did this, and I was warned by my accountant that can be incredibly complicated and you certainly will not get your entire rent or mortgage taken off as a deductible just because you do an hour’s worth of admin in your front room each week.
You can get a portion declared, but it needs to be calculated correctly, so I would suggest you discuss this with an accountant if you really want to go ahead with this.
Can I use my personal bank account?
It’s absolutely up to you as to whether or not you decide to use your own bank account to take payments from your clients.
However, I would strongly suggest you don’t.
This was a mistake I made when I first went freelance, and I can tell you now, going through months of your bank statements to try to find all your client’s payments and highlight them all so you can send them off as proof as payments is a complete pain.
Instead, it is a much better idea to open a business account with your bank (which is really easy to do), and have all your clients pay into that account.
This way, all you will need to do is print off or download your statements from your business account and send them off to the HMRC.
If you are unsure of how to set up a business account, you can perform a search with your banks’ name with the word “business account”.
There will almost certainly be an explanation of what you need to do to open this new account, and if you are still unsure you can go into your local branch and ask them directly.
However long this takes for you to do, it is totally worth doing for the time it will save you later on down the line.
Do I need to keep my tax records?
Oh my goodness yes.
Once you get your tax statements back from the HMRC, you must keep all these records for at least 22 months.
I would also suggest that you keep every single PDF from your clients’ payments (from your business account) along with every receipt from every purchase you made and declared.
The reason for this is that at any point, the HMRC can ask to see your records and audit them to make sure everything is being kept above board.
You really don’t want to find out you are being audited and realize that you have thrown away the receipts for items you declared two years ago. It may seem like it was a long time ago so no one will need to see it, but for your own sake, keep them somewhere safe.
I kept all of my receipts and monthly statements in plastic files in an accordion file in my room. I did this each month and wrote the dates on each of them so I could easily find them whenever I needed them.
You don’t have to do this, of course, you can store them any way that works for you, but the easier they are to find, the better. Being messy with your documents is not a good idea, and it is very easily avoided if the proper care and attention are given to them.
Benefits of hiring an accountant
Can you declare your own income and expenses without the use of an accountant?
Of course, you can.
However, I would actually recommend against this, especially if you are new to being self-employed, and there are a few reasons why.
The main reasons for this are that when you start looking online for what you can and can’t declare as a business expense, you are only going by what you see or hear on the internet.
I hired an accountant to do all my tax returns for me, and the cost of the accountant’s fees was easily outweighed by the knowledge they had of what was and wasn’t able to be declared as a business expense.
They were asking me all sorts of questions about what I was using for my business, and I was shocked at their suggestions of what I could put through. It saved me a lot of money that I would have otherwise paid.
Accountants are professionals and know their business inside out
Accountants have trained for years to get their qualifications, they are experts in their field, so why not make use of their excellent knowledge?
You will have a much easier time if you hire an accountant, and remember, you only have to hire them once a year, you aren’t usually paying them monthly unless you spread the cost of a tax declaration over a year.
As I said, they can save you a fortune in tax-deductible items that you would otherwise not know about, but they save you something far more important.
They save you so much time!
Of course, you can do all your own taxes, but it’s so much easier when you hire an accountant. They will likely explain the whole procedure to you and will be a point of contact when you don’t understand something (which saves you spending two hours on the phone to HMRC).
They will often give you some software (or even just a spreadsheet) so that you can easily keep track of all your expenses, and this that just needs to be submitted to them when it’s time to declare your income.
They make the whole process so easy that it really doesn’t make sense to take hours and hours of your weekends or evenings and getting stressed about something that can be done by an accountant in a very short period of time.
The money you save by not hiring an accountant is really not worth it. Hire an accountant, reduce the stress for yourself and concentrate on being a great personal trainer instead.
What if I’m employed but train people on the side?
So, what if you are employed by a gym as a personal trainer and they are paying you a payslip each month, but you do a few hours of private PT sessions in the evening or on the weekends?
Some people may work a standard 9-5 day job and do a little PT on the side, I wrote an article about why being a PT is a great side hustle that you might like. Give it a read if you have wondered how this could work for you.
Personal Training As A Side Hustle: How To Guide
Do you still need to declare your additional income if you are already employed?
Yes, you do.
Even though you are employed, you can still be self-employed at the same time if you are doing additional freelance work, and legally this income should be declared.
This is one situation where a lot of people think they can get away with not declaring additional income as because they are employed, they think they will not be investigated.
Well, I can tell you that if you are discovered taking money in addition to your employment and not declaring it, you can still get a hefty fine for doing so.
You will still need to go through the same process as above by signing up as self-employed because you will still need your UTR (unique tax reference) number.
You will then need to declare any additional income you have received along with any receipts of purchases. It’s really exactly the same as if you were fully self-employed.
In this instance, I would say the only real difference is that in this case, you may be ok to fill in all your self-assessment forms yourself. The difference this time is that you will have a lot less income and expenses to file, so the time it will take you is much smaller and the process is a little more simple.
If you still feel uncertain of what you are doing, feel free to hire an accountant to help you out.
What tax do employed (PAYE) personal trainers pay?
As a fully employed trainer, any tax or national insurance contributions will be automatically deducted from your payslip each month.
This is a far easier way of paying your tax and one of the main benefits of choosing to be employed. The main problem is that with being employed as a trainer, because you are paid a set rate, there is a cap to how much you can stand to earn as there are only so many hours in the day.
The income tax that will be deducted from your payslip will be around 20% (true as of 17/11/2020) and you will have national insurance and pension contributions deducted too.
National insurance fees would need to be paid if you are self-employed anyway, so there is not much difference there, but the pension is a very valuable thing to pay into, as many companies will match your own payments.
This leaves you with a much more sizeable pension pot when you come to retirement age, something that you would not have if you had not decided to take this into consideration when acting as a self-employed trainer.
Personal trainers pay tax whether they are employed or self-employed. It is only the way that you pay taxes that changes.
If you are self-employed you will need to keep track of your income and expenses so that you can submit them to the HMRC at the end of each tax year.
Employed personal trainers will have any income tax and national insurance deductions taken out of their payslips automatically each month.
My opinion is that it’s much easier to pay for an accountant to help you submit your tax returns each year as they will save you a lot of time, they aren’t very expensive and they will let you know about a whole host of items that are tax-deductible.
Don’t let paying tax as a personal trainer intimidate you, remember, if you are doing it yourself you can always call the HMRC for advice, or you can hire an accountant to do it all for you.
I would just like to cover myself here by saying that I am not an accountant, and so any information in this article should be checked and confirmed by a registered accountant. I am simply letting you know what I encountered in terms of being a self-employed trainer myself.
If in doubt, talk to the HMRC or a qualified accountant.
If you enjoyed this article and feel it might help others, please feel free to share it or link back to it.