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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 Assessment1,040

 

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 Teaching95,000 -
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)