Understanding HMRC & the Trading Allowance for New Massage Therapists
Starting out as a self-employed massage therapist can be exciting—but dealing with HMRC and tax returns? Not quite as thrilling. If you’re not earning much yet, you might be wondering when you need to register as self-employed, whether you have to pay for bookkeeping software, and if you should claim expenses or just use the trading allowance.
Don’t worry—I’ll break it down in a simple, easy-to-understand way. Plus, my partner works in accounting, so I’ve had plenty of these conversations!
Do I Need to Register as Self-Employed?
In the UK, you only need to register as self-employed with HMRC if your gross income (that’s everything you earn before expenses) goes over £1,000 in a tax year (from 6th April to 5th April). This is called the trading allowance, and it’s a tax-free amount you can earn before needing to tell HMRC about your business.
If you earn over £1,000 from your massage business in a tax year, you must register as self-employed by 5th October after the tax year ends. For example, if you go over £1,000 between April 2024 and April 2025, you’ll need to let HMRC know by 5th October 2025.
When you register, HMRC will ask for personal details like your name, address, date of birth, and National Insurance number. Once processed, they’ll send you a Unique Taxpayer Reference (UTR) number, which you’ll need for your tax return.
Trading Allowance vs. Claiming Expenses
If you’re only making a small amount from your massage business, you have two choices when it comes to tax:
- Use the £1,000 trading allowance – This means you won’t need to keep records of your expenses, but you also can’t deduct any business costs (such as oils, laundry, or room rental).
- Claim your actual business expenses – If your expenses add up to more than £1,000, you’re better off keeping track of them and deducting them from your income instead of using the trading allowance.
Example:
- You make £1,500 in a tax year.
- Your expenses (rent, oils, laundry, insurance, etc.) come to £800.
- If you use the trading allowance (£1,000 deduction), your taxable profit is £500.
- If you claim actual expenses (£800 deduction), your taxable profit is £700.
In this case, the trading allowance is better because it reduces your taxable profit more. But if your expenses were, say, £1,200, then claiming them instead of using the trading allowance would save you more money.
Do I Need to Pay for Bookkeeping Software?
If you’re just starting out, you don’t need fancy bookkeeping software. HMRC doesn’t require you to use it unless you’re VAT-registered or earning over £50,000 under Making Tax Digital rules (which most new massage therapists won’t be).
Instead, you can:
✔ Use a simple spreadsheet (Excel or Google Sheets)
✔ Keep a notebook for income and expenses
✔ Use free bookkeeping apps (like Wave Accounting or Pandle)
Just make sure you keep records of what you earn and what you spend in case HMRC ever asks for proof.
What Happens If I Make a Loss?
If your business expenses are higher than your income, you won’t pay tax—but you must still submit a tax return.
The loss can be:
✔ Carried forward to reduce tax in future years (useful if you expect to earn more next year).
✔ Offset against employment income if you also have a job, which could lead to a tax rebate.
When Do I Need to File a Tax Return?
The tax year runs from 6th April to 5th April each year. If you’re registered as self-employed, you must submit your Self-Assessment tax return by 31st January the following year. This is also when any tax due needs to be paid.
If your total tax bill is over £1,000, HMRC will ask you to make payments on account—meaning you’ll need to pay some of next year’s tax in advance, split into two payments due 31st January and 31st July.
Final Thoughts
If you’re just starting out and not making much yet, the trading allowance could keep things simple. But as your business grows, tracking your expenses might save you more tax in the long run. Either way, don’t panic—tax doesn’t have to be scary! Keep good records, know when you need to register, and if in doubt, ask for help.
Need more help with the business side of massage? Stay connected for more tips to keep things simple and stress-free!