Case Study Examples of Tax for a Yoga Teacher

This Content Was Last Updated on November 23, 2023 by Jessica Garbett

 

Here are some examples of how tax and NI is worked out for a Yoga Teacher.  The first four case studies are sole traders, the fifth a teacher working via a company:

1. Mildred – teaches yoga part time, and also works in a supermarket
2. Annabel teaches yoga full time
3. Simone teaches yoga full time and does rather well at it
4. Sally is a new teacher and makes a loss in her first year, she also works in a bank
5. Carly works as a Yoga Teacher through Carly Limited.  Co-incidentally she earns the same as Simone (Case Study 3)

You can model your own tax position with our Tax Calculator for Self Employed Yoga Teachers

Note these case studies are not updated NI changes in Autumn Statement 2023 – the impact will be minimal.  To recap the Autumn Statement provided for:

• 2% cut in Employees NI from 6th January 2024
• 1% cut in Self Employed Class 4 NI from 6th April 2024
• Abolition of Class 2 NI for the Self Employed from 6th April 2024.

 

Mildred – teaches yoga part time, and also works in a supermarket

Case Study 1
Mildred - teaches yoga part time, and also works in a supermarket
	£ gross	£tax
Profit from Yoga Teaching	5,200
Wages from Supermarket	15,000	486
Total income	20,200	486
Tax free allowance	12,570
20% tax on	7,630
Tax at 20%	1,526
Less paid via PAYE	486
	1,040
Class 2 NI	-
Class 4 NI	-
Total due under Self Assessment	1,040

 

Annabel teaches yoga full time

Case Study 2
Annabel teaches yoga full time
	£ gross	£tax
Profit from Yoga Teaching	25,000	-
Total income	25,000	-
Tax free allowance	12,570
20% tax on	12,430
Tax at 20%	2,486
Less paid via PAYE	-
	2,486
Class 2 NI	179
Class 4 NI	1,119
Total due under Self Assessment	3,784

 

Simone teaches yoga full time and does rather well at it

Case Study 3
Simone teaches yoga full time and does rather well at it
	£ gross	£tax
Profit from Yoga Teaching	95,000	-
Total income	95,000	-
Tax free allowance	12,570
20% tax on	37,700
40% tax on	44,730
Tax at 20% and 40%	25,432
Class 2 NI	179
Class 4 NI	4,288
Total due under Self Assessment	29,899

 

Sally is a new teacher and makes a loss in her first year, she also works in a bank

Case Study 4
Sally is a new teacher and makes a loss in her first year, she also works in a bank
	£ gross	£tax
Loss from Yoga Teaching	(4,000)
Wages from Bank	30,000	3,486
Total income	26,000	3,486
Tax free allowance	12,570
20% tax on	13,430
Tax at 20%	2,686
Less paid via PAYE	3,486
	(800)
Class 2 NI	-
Class 4 NI	-
Total refund due under Self Assessment	(800)

 

Carly works as a Yoga Teacher through Carly Limited.  Co-incidentally she earns the same as Simone (Case Study 3)

Case Study 5
Carly works as a Yoga Teacher through Carly Limited. Co-incidentally she earns the same as Simone (Case Study 3)
Company Taxes	£ gross	£tax
Profit from Yoga Teaching	95,000	-
after expenses but before directors salary
Directors Salary	(12,000)
Employers NI	(400)	400
Profit for Corporation Tax	82,600
Corporation Tax	18,139	18,139
Total paid by company		18,539
Dividend (Profits less Corporation Tax)	64,461
Nb Carly could leave part of the dividend in the company and defer tax
Personal Taxes:	£ gross	£tax
Salary	12,000
Dividend	64,461
Total income	76,461
Tax free allowance	12,570
Taxed at 20% and 40%	63,891
20% tax on	37,700
40% tax on	26,191
Tax at 20% and 40%	12,051	12,051
Due under Self Assessment
Class 1 NI	68	68
Paid via company payroll under PAYE
Total paid by Carly		12,119
Total Tax Company / Carly personally		30,658
Note - on the same figures above, Simone, a sole trader paid
Simones tax and NI		29,899
By operating through a limited company Carly has paid extra tax of:		(622)