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:
- Mildred – teaches yoga part time, and also works in a supermarket
- Annabel teaches yoga full time
- Simone teaches yoga full time and does rather well at it
- Sally is a new teacher and makes a loss in her first year, she also works in a bank
- 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) | |