The 2021 Autumn Budget was the first in 3 years. To our relief, we were able to hear a budget that positioned the pandemic behind us and a new age of optimism for the country and how the Tory Government sees the near future ahead.
We were fearing significant tax hikes in different areas of tax legislation that would attempt to recover some of the heavy investment made by the Government to see the country through the pandemic. However, previous tax increases announced such as Corporation Tax moving to a progressive rate increase up to 25% coupled with helpful borrowing data allowed the Government not to issue any more unwelcome news.
Below are some of the budget highlights with respect to personal trainers in the fitness industry:
- Businesses will benefit from several changes to the business rates regime, including freezing of business rates multipliers for a second year from 1 April 2022 to 31 March 2023. If you are a personal trainer with your own gym facilities, then you may be able to benefit from this.
- Income tax basis periods will be reformed so that a business’s profit for a tax year will be the profit arising in the tax year itself, regardless of accounting date. As a self-employed personal trainer starting to trade following passing your qualifications, accounting for your income with these changes will become easier. However, it’s important to stay on the right side of the tax man and speaking with an accountant about basis periods and how they apply to you is recommended when you’re starting out.
- The National Living Wage is set to rise up to £9.50/hour for employees aged 23 and above representing a 6.6% increase, a welcomed change for many employees. In addition, national minimum wage is increasing for all ages under 23 at varying rates. If you’re self employed this may not apply to you. However, if you work in a gym, the gym may have a hybrid structure of both employment and self-employment with you. Conventionally, you would work 12-15 hours employed per week in a gym and this is offset against the value of the rent gyms charge you to offer personal training sessions in their gym as self-employed. If the hourly wage rate has increased, your 12-15 hours are worth more and you may see additional wage monies owed to you. However, gyms may review their rent charges and look to increase the expense effectively cancelling this out. It would be worth having a conversation with your gym to see how the new rules will apply.
- Making Tax Digital (MTD) for income tax self-assessment (ITSA) has been delayed to 6 April 2024. Any sole trader and landlord with annual income >£10,000 will fall under this significant income tax change but there is now more time to prepare. If your personal training income will pass this threshold, this will apply to you. Check out our other blog on Making Tax Digital for Income Tax for further information.
- Finally, national insurance has already been announced to increase slightly. Check out our other blog on the recent NI announcements.
If you have any queries on how any of these changes may apply to you directly, please get in touch. This summary has been prepared quickly following the announcements and is for general information only.