Claiming your 'Allowable Expenses' will save you money - but what can you claim for?
Before I explain what expenses can a personal trainer claim? I quickly want to run through a couple of points.
As a self-employed personal trainer, you must account for all of the money that enters and leaves your business bank account. You must also keep an accurate record of all transactions for at least five years – so it’s important that you have a good system in place.
Most personal trainers use what is called ‘cash basis’ accounting (or cash accounting), this means that they only account for money that actually comes in and out of their business during a tax year – they don’t include any money that is owed to them. It’s a slightly easier than traditional accounting but it is only available to small self-employed businesses earning less than £82,000.
Ideally money should only leave your business bank account for one of three reasons:
1- you are transferring money into your personal bank account (payment to self) – effectively paying yourself;
2- you are paying a bill (an allowable expense) on behalf of your business;
3- you are transferring money into your business savings account ready to pay your income tax and National Insurance contributions.
At the end of the year, you submit your tax return; you tell HMRC exactly how much money has come into your business, you subtract all of your allowable expenses and you pay income tax and Class 4 National Insurance on what is left.
Occasionally, you might buy something very big for your business (over £25,000), these are called Capital Expenses and are dealt with slightly differently – you can’t claim all £25,000 worth of tax relief for one item in a single year, it’s spread over several years and you will probably need an accountant to advise you on exactly how to do this.
So what are ‘Allowable Expenses’?
As a personal trainer, you will charge your clients a fee to train with you. The tax man (HMRC), will assume that all of the money your client pays you is profit (and that you put it in your pocket and spend it), so they will expect you to pay tax on the full amount. But not all of the money your client gives you is profit because you have things to buy, and bills to pay, to keep your business running – these are called ‘Allowable Expenses’
If you can prove (by keeping accurate records and receipts), that you have spent some of the money that your clients pay you on ‘Allowable Expenses’, then HMRC will not expect you to pay income tax and Class 4 National Insurance on this money.
Total Income – Allowable Expenses = Taxable Profit
So knowing what ‘Allowable Expenses’ are and keeping a record of them will reduce your tax bill – actually saving you money!
Now not everything that you buy is considered to be an ‘Allowable Expense’ – as a rule-of-thumb, if you buy something that is wholly and exclusively for your role as a personal trainer then you can probably consider it to be an ‘Allowable Expense’ if however it is something that you would need anyway (like shampoo or lunch), then you probably can’t!
Whilst I have done everything to ensure that this list is accurate at the time of writing, the Government can, and does, change things, so I strongly advise you to get a qualified accountant to check and verify your expenses before you file your self-assessment tax return.
There is also useful advice on the HMRC website:
Finally, before I run through the list of allowable expenses, please don’t confuse income tax with VAT. Income tax is the money you pay to the government based on the profit your self-employed business makes. VAT, on the other hand, is money that you pay the government every time you buy something and the only way to reduce the amount of VAT you pay is by becoming VAT registered.
If you haven’t yet started as a self-employed personal trainer you might also find the following blogs interesting:
How to start a personal training business
Setting up as a self-employed personal trainer
If you think that you need a hand setting up and running your personal training business, come and see what we do at mefit.
So here are some ‘Allowable Expenses’: I have grouped them into categories to help you:
Allowable Expense No.1- Direct Costs:
These are the costs directly associated with the running of your business that do not fit into any of the other categories listed. Typically less than £200, may include consumable bits of kit like dyna-bands, fit-balls, mats, music licenses and disinfectant wipes.
Allowable Expense No. 2- Marketing Costs:
All of your marketing materials including paying graphic designers, Google Adwords or Facebook Ads campaigns and royalties for photos.
Allowable Expense No. 3- Internet & Website:
Your business domain name and other business web costs are 'Allowable Expenses', however it is likely that you will use your broadband for personal use, therefore only a percentage of the fee is tax deductible (you should include the full amount in your accounts and your accountant will decide on the percentage that you can claim).
Allowable Expense No. 4- Travel:
Genuine business travel expenses: flights, rail, taxis and coach or bus fares and all 'Allowable Expenses' (you can’t claim travel expenses to and from your primary place of work – so if you do most of your training from a gym, you can’t claim travel to and from that gym).
Allowable Expense No. 5- Mobile Phone:
As a personal trainer, your mobile phone will probably be your primary business tool, you should therefore be able to claim most of your monthly contract subscription as an 'Allowable Expense'.
Allowable Expense No. 6- Entertainment:
Costs associated with hosting events and meetings are NOT normally considered to be 'Allowable Expenses' but costs associated with offering free 'taster sessions' or ‘consultations’ may be, so keep a record of them.
Allowable Expense No. 7- Associations & Professional Bodies:
REPs membership and other business related fees are 'Allowable Expenses'.
Allowable Expense No. 8- Literature / Subscriptions:
Materials that are relevant to your professional development, such as industry magazines and books, are 'Allowable Expenses'.
Allowable Expense No. 9- Printing / Postage / Stationery:
Any printing and postage associated with your business is an 'Allowable Expense'.
Allowable Expense No. 10- Branded Clothing:
Genuine promotional materials such as branded T-shirts or uniforms are 'Allowable Expenses', but you cannot claim for your day-to-day kit. (As a rule of thumb – if it’s got your logo on it, you can probably claim for it).
Allowable Expense No. 11- Subsistence:
If you travel on a significant work-related journey (like a conference), you can claim subsistence as an 'Allowable Expense'. Note this does not include time spent travelling between regular clients' homes if you are a mobile PT nor does it include coffees with clients. There are also limits as to how much you can claim so don’t book yourself into the most expensive hotel you can find and run up a huge bar bill! The HMRC guidelines currently suggest £5 for breakfast and £15 for an evening meal.
Allowable Expense No. 12- Purchases for Resale:
Buying products to sell on to your clients such as fit-balls and heart rate monitors are 'Allowable Expenses', you will however pay tax on any profit that you make.
Allowable Expense No. 13- Training Courses:
All of the costs associated with attending professional development courses are 'Allowable Expenses'.
Allowable Expense No. 14- Accountancy:
All of the costs associated with paying someone to manage your finances or to prepare and file your tax return are 'Allowable Expenses'.
Allowable Expense No. 15- Bank Charges / Fees:
These are usually 'Allowable Expenses' providing they are for a business bank account.
Allowable Expense No. 16- Gym Equipment:
The costs associated with buying small pieces of equipment such as kettle bells, suspension trainers and Bosu’s are 'Allowable Expenses'. (Costs associated with very big pieces of kit maybe 'Capital Expenses' and any tax allowance may be spread over several years, but you may be able to include them within your "Annual Investment Allowance'. As was explained earlier, I strongly advise you seek advice from a qualified accountant.)
Allowable Expense No. 17- Office Equipment:
Most items like computers, tablets, scanners & printers are ‘Allowable Expenses’
Allowable Expense No. 18- Office Furniture:
Most items like chairs, a desk and a filing cabinet are ‘Allowable Expenses’
Allowable Expense No. 19- Repairs:
All of the costs associated with repairing equipment used by your business are 'Allowable Expenses'.
Allowable Expense No. 20- Hire of Equipment:
The costs associated with hiring gym equipment and gym / village hall space are 'Allowable Expenses'.
Allowable Expense No. 21- Sub Contractors:
If you pay someone else to run a session or a boot camp on your behalf, you can claim what you pay them as an 'Allowable Expense'. (If you do this a lot, be careful not to accidentally fall into the employment criteria).
Allowable Expense No. 22- Hire Purchase Payments:
Hire Purchase payments for equipment directly associated with your business are 'Allowable Expenses', but if it is for a very expensive piece of kit, they may be Capital Items and need to be written off over several years.
Allowable Expense No. 23- Lease Payment:
Costs associated with the lease of business premises or equipment are 'Allowable Expenses'.
Allowable Expense No. 24- Bank Loan:
The interest on a business loan is an 'Allowable Expense'.
Allowable Expense No. 25- Insurance:
Your business insurance is an 'Allowable Expense'. Do NOT include any personal insurance, your house insurance or your car insurance, if you are claiming a mileage fee.
So there you have it, a list of 25 allowable expenses – things that you can buy on behalf of your personal training business without having to pay income tax on the money you use to buy them.
Note: As I mentioned previously, this list is only a guide as to what may or may not be considered an 'Allowable Expense'. Whilst I have made every effort to provide you with accurate advice, you should not use any information contained within this document as the basis for your tax return without first seeking professional financial advice from a suitably qualified person.
Come and find out how mefit can help you get more from your personal training business.
What other questions might you have about claiming expenses as a personal trainer?
National about Insurance Contributions?
Your Class 2 and class 4 National Insurance payments are NOT 'Allowable Expenses' but you should record them, particularly if you pay them directly from your business bank account.
What about using part of your house as an office?
As a self-employed personal trainer, you are entitled to use part of your home as an office to do your preparation and book-keeping. The easiest way to claim tax relief for this is at a flat rate of £2 per week - a single cost of £104 at the end of the year. If you choose to do this, you must not include any of your domestic bills in your business accounts.
If you decide to claim significantly more for the use of part of your home as an office, you may inadvertently switch a percentage of your home from being classified as residential to commercial which would have significant implications, were you ever to sell it. The same applies if you convert part of your house or your garage to a gym - be very careful and seek advice regarding claiming tax relief on the running costs.
How do you claim for expenses associated with running your car or motorbike?
The easiest way to claim for the use of your car is by charging a fixed fee, for every mile that you travel as part of running your business (remember you cannot claim mileage to and from a fixed place of work such as a gym). Although this does require you to record all of your business mileage, it is far less likely to be questioned or investigated by HMRC as you will have a record of every journey.
At the time of writing the standard mileage fee is £0.45 for the first 10,000 miles, then £0.25 or £0.24 regardless of mileage for a motorbike, however your accountant will be able to advise you as to the exact amount that you can claim when you submit your Self-Assessment Tax Return.
If you cycle, you can also claim mileage but at the lower rate of £0.25 per mile. Log your mileage in exactly the same way - but don't try to claim for a 100km training ride!
If you do buy a car or van and use it solely for your business, then record all of the costs including the purchase cost and seek advice from a qualified accountant.
You can either pay yourself for your mileage regularly throughout the year or as a single claim at the end of the year, but you will have to provide proof of mileage and invoice yourself.
Do you get any tax relief on Pension Contributions?
If you have a personal pension, pay it from your personal bank account (not from your business bank account) as you pay Income Tax on your earnings before any pension contribution. Your pension provider then claims back tax from the government at the basic rate of 20%. This means that for every £80 you pay into your pension, you end up with £100 in your pension pot. This may sound a bit complicated but it is the way that it is!
The Information contained within this document is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this document is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this document and provided from or through this document is general in nature and is not specific to you the User or anyone else. YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED ON THIS DOCUMENT WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A PROFESSIONAL BROKER OR COMPETENT FINANCIAL ADVISOR. You understand that you are using any and all information available on or through this DOCUMENT AT YOUR OWN RISK.
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