The fitness industry has seen a boom in recent years with an increase in gyms and personal trainers popping up. If you’re a personal trainer in the UK your earnings can be anywhere between £15,000 all the way up to £50,000 depending on how much you charge and how your business is set up.
If you’re a self-employed freelancer, that salary may from multiple income streams and keeping track of all of them can be complicated. However, having organised finances means that you might be able to find ways to save money – such as claiming allowable expenses for business related costs.
Running your personal training business is hard work, so we’ve made it easy to understand allowable expenses and see how you might be able to maximise your earnings.
What are allowable expenses?
Allowable expenses are made up of the essential costs that keep your business running properly. If these costs were incurred specifically due to the running of your business, you don't have to pay tax on the money you've spent.
HMRC lets you subtract these costs from your business' profit and taxes you on what remains after. So, let’s look at what claiming allowable expenses means in practice: If, for example, you made £20,000 last year but spent £2,000 on allowable expenses, you would only be taxed on £18,000. This can create a significant savings for you, making it easier to keep your personal training business running.
However, there are restrictions on what can be put down as an expense. So, having a clear understanding of what you can claim as allowable expenses will ensure you're paying the right amount when submitting your self-assessment tax return at the end of the tax year and that you don’t become an accidental tax avoidance target of HMRC.
When it comes to claiming allowable expenses for your personal trainer business, there are a number of rules you should follow:
- You can only claim for the expenses you incur wholly and exclusively during the everyday running of your business.
- You can’t claim for expenses that have a dual purpose for business and personal use. For example, if you use your mobile phone for both business and personal use, you can only claim for the expenses related to the business use and will have to show reasonable calculations for this.
- Business expenses can be paid through your company’s bank account, or you can reclaim the costs of business expenses paid by you and later reimbursed via your business.
- You should maintain an accurate record of all your expenses and their receipts, so you can justify your actions if your business expenses claims are queried in the future.
What income should personal trainers track? (PAYE or sole trader)
Each personal trainer has their own business set up – it may include only one stream of income or several. They may have many clients of their own or work at a gym helping members there. Depending on your structure and how you’re paid, you may need to track your income differently.
I get paid with a payslip via PAYE
If you’re an employee for someone such as a gym or another trainer who you help and you receive payslips via PAYE only and have no other income that needs to be declared, then you probably won’t need to file a self-assessment tax return. This is because the PAYE system takes out taxes from your payslip already. You can check who exactly needs to file their own taxes on the UK Government website.
I get paid directly as a sole trader
If your work is contracted and you’re paid directly without any taxes being taken out, then you’ll need to fill out a self-assessment tax return and report all of your earnings to HMRC. If you haven’t filled one out before, read our guide to filing a self-assessment tax return.
I get paid in both ways
If your personal trainer work gets compensated through PAYE sometimes and directly at other times, you’ll need to report your income from both to HMRC. Any other income streams you have in addition to personal training would need to be reported on the self-assessment tax return as well. Once HMRC understands what your total income is during the tax year, they’ll be able to calculate the correct tax rate.
What expenses can personal trainers claim?
It can be tricky to figure out what expenses are tax deductible. While this list may not cover everything, it’ll give you an idea of what kind of costs could be claimed as allowable expenses.
Insurance
Every time you take on a new client, you’re also taking on a new set of risks that could injure you or them. Accidents happen every day, no matter how careful you are. And you could end up having to pay out a lot of money – that’ll come directly out of your own pocket if you don’t have the right cover. Any money you spend on buying a personal trainer insurance policy can be claimed as an allowable expense.
Car expenses and mileage
This can include business travel and mileage, parking fees, fuel, repairs and maintenance as long as all of those costs are incurred for the purpose of doing business such as transport to and from client’s homes for sessions. If you get any fines or tickets while driving, be aware that you will not be able to claim any allowable expenses on these.
If you use your personal car for business, then you’ll need to calculate what portion of costs are used for business and will only be able to claim allowable expenses on that portion.
To make your book keeping easier, you may be able to calculate your vehicle expenses using a flat rate (known as simplified expenses) for mileage instead of the actual costs of buying and running your vehicle. This won’t be as precise and you may miss out on some savings, but the process is a lot more streamlined.
Supplies & equipment
As a personal trainer, there’s a lot of equipment you might use including exercise balls, hand sanitiser, stop watches, bandages or tape, studio rentals, disinfectant, weights and more. Any of the gear you’ve purchased that is used exclusively to train your clients can be claimed as an allowable expense. Even a sound system and music streaming could be tax deductible expenses if they are used solely for your clients and not by you during your personal time.
Marketing
In order to be successful a business will have to spend some money on promoting their business. Any time that promotion costs you money, you can claim it as an allowable expense. If you spend money on flyers to hang in a gym you work at or want to set up a website detailing the services that you offer, all of this can be deducted from your taxes.
What are the disallowable expenses that PTs can't claim?
While a lot of your expenses can be covered under allowable expenses, unfortunately there are some things that definitely can’t be claimed. While this list isn’t exhaustive, here’s a few things you won’t be able to list as an allowable expense and will still have to pay the taxes on:
- Parking fines and penalties
- Tax penalties and late payment interest
- Lunch, unless in special circumstances
- Client entertainment
- Everyday clothing or business suits
- Your pension costs
- Your salary
How to claim your expenses?
At the end of the tax year, you’ll add up all of your allowable expenses and list the total amount on your self-assessment tax return. While you don’t need to include receipts or evidence of this total at this stage, it’s important that you keep all of that information as HMRC can ask for it for up to six years after your filing date. If you weren’t able to produce evidence when asked, you could be fined for submitting incorrect information, so it’s important to have an organised filing system.
Staying organised
To stay organised, set aside a specific time each week to make a note of the business expenses that you're liable to receive tax relief for – you may want to get familiar with spreadsheets as a way of tracking everything. By doing a bit of admin every week, it keeps claiming allowable expenses from being a daunting task during tax season. It also ensures that your expenses are more accurate because you’re taking notes as you go along when everything is fresh in your mind. If you’re struggling to stay on top of things you could invest in accounting software to help you track your finances – there are plenty of inexpensive and free options to choose from.
Nobody wants to pay more tax than they have to, which is why keeping your business as tax efficient as possible could help you save a pretty penny. If you're finding the process of working out what allowable expenses your business can and can't claim, get in touch with an accountant for advice to make sure everything is above board.
All links are checked and valid at time of publishing, 20 June 2022.
