Starting a small business and teen earnings (KS4)

Key Stage: KS4
Year group: Year 10-11
Age range: 14-16
Duration: 60 minutes
Subject: PSHE / Citizenship / Maths / Business
Cost: Free

Learning aim

Pupils can calculate profit from revenue and costs, distinguish fixed and variable costs, set a price that covers costs, explain the difference between being employed and self-employed, and describe the £1,000 UK trading allowance and when a young person would need to tell HMRC.

CURRICULUM Curriculum links (four UK nations)

PSHE Association KS4: enterprise skills and attributes; about the world of work; managing personal finance.
Citizenship KS4 (England): income and expenditure, the role of money, and the rights and responsibilities of earners.
Maths KS4 (England): solve problems with money; profit and percentages; interpret financial information.
Scotland (CfE): Health & Wellbeing — enterprise and finance; Numeracy — money, profit and percentages.
Wales: Health & Well-being and "career and work-related experiences"; Mathematics & Numeracy — money and profit.
Northern Ireland: Learning for Life and Work — enterprise and employability; Mathematics & Numeracy — money problems.

See the full mapping on the teacher curriculum map.

RESOURCES What you'll need

Mini-whiteboards + pens; calculators
A simple "business idea" card per group (e.g. custom keyrings, car washing, baked goods, digital art commissions)
Worksheet: cost / price / profit planner

CONTEXT Background for the teacher

Profit = revenue − costs. Revenue is money in from sales. Costs are money out.
Fixed vs variable costs. A variable cost happens per item (materials per keyring). A fixed cost happens regardless of how many you sell (a one-off stall fee, a tool).
Pricing. A price must at least cover the cost per item; profit is what's left after all costs. Underpricing ("just charge a bit") is the most common teen-business mistake.
Employed vs self-employed. A Saturday job is employed — tax is handled through PAYE by the employer. Selling things you make or a service you provide is usually self-employed ("trading"), and the responsibility to report it can fall on you.
The UK trading allowance. There is a £1,000 trading allowance per tax year. If total trading/"miscellaneous" income is £1,000 or less in a tax year, you generally do not need to tell HMRC or pay tax on it. If it goes over £1,000, you may need to register for Self Assessment and report it (and can deduct either the £1,000 allowance or actual expenses). Most teens also have the Personal Allowance, so small amounts usually mean no tax — but the reporting threshold is the key idea. Always check current rules at GOV.UK; figures can change at a Budget.
Note for the teacher: there are separate rules about the ages/hours at which children can be employed (local byelaws). This lesson focuses on a self-employed "side hustle" and the money/tax thinking, not employment law.

LESSON Lesson structure (60 minutes)

5 min
HOOK

"You sell 20 custom keyrings for £4 each. You feel rich — £80! What's wrong with calling that your profit?" Collect ideas on whiteboards; draw out that costs haven't been taken off yet.

15 min
TEACH

Teach profit = revenue − costs; fixed vs variable costs; pricing to cover cost; and employed vs self-employed plus the £1,000 trading allowance and the "tell HMRC if over £1,000" idea (use the background). Emphasise checking GOV.UK for current figures.

15 min
GUIDED

Groups complete the cost/price/profit planner for their idea card. Worked anchor: 20 keyrings, materials £1.20 each (variable = £24), one-off £10 tool (fixed). Revenue at £4 = £80. Total cost = £34. Profit = £46. Then: what if you'd priced at £2?

15 min
CHALLENGE

Trading-allowance scenario: "Over a tax year your side hustle makes £850. Do you need to tell HMRC?" (Generally no — under £1,000.) "It grows to £1,400. Now what?" (You may need to register for Self Assessment and report it; the £1,000 allowance or real expenses can be deducted.) Pupils write the rule in their own words and note "check GOV.UK".

10 min
PLENARY

Each pupil writes the three things a sensible teen business does from day one: know your cost per item, price above it, and keep a simple record of money in and out. Share three.

DIFFERENTIATION Adapting for all learners

Support

Provide the planner with revenue and the cost list filled in, so pupils only do the subtraction. Give the trading-allowance rule as a two-box flowchart (under £1,000 / over £1,000).

Stretch

Add a break-even calculation (how many must you sell to cover fixed costs?), and a pricing decision with a competitor's price. Explain why deducting the £1,000 allowance vs real expenses could differ.

SEND SEND adaptations

Use one concrete product all lesson; keep numbers small and whole.
Pre-teach vocabulary with cards: revenue, cost, profit, fixed, variable.
Replace written rule with sorting statements into "tell HMRC / no need".

EAL EAL support

Bilingual key words: money in / money out / profit / report / allowance.
Keep the planner numeric and visual; allow annotated calculations.

ASSESSMENT Assessment criteria

Working towards: can state that profit is what's left after costs.
Expected: can calculate profit, separate fixed and variable costs, and state the £1,000 trading-allowance idea.
Greater depth: can set a justified price, work out break-even, and explain when a young person would need to register with HMRC and why "check GOV.UK" matters.

HOME Homework pack

Mini plan. Pick a realistic small idea. List its fixed and variable costs and set a price that makes a profit at 15 sales.
Tax check. In your own words, when would a UK side hustle need to be reported to HMRC? (Expected: when trading income for the tax year is over £1,000 — check GOV.UK for current rules.)
Records task. Design a simple one-page "money in / money out" record you could actually keep.

SAFEGUARDING Classroom safeguarding

Keep it educational. This lesson teaches money and tax thinking; it is not advice to start trading, and pupils should not be pushed to earn. Do not ask pupils to disclose family income or business activity.

Flag the scam overlap. "Make money fast" schemes, recruiting friends, or being asked to move money for someone are not businesses — they can be scams or money-mule recruitment. Link the scam awareness lesson and remind pupils to check anything unclear with a trusted adult. If a pupil discloses a concern, follow your school's safeguarding policy and the Designated Safeguarding Lead.

For real decisions, current rules are at GOV.UK; free guidance is at MoneyHelper.

This is general financial and PSHE education, not advice. Tax figures are tax-year dependent — always confirm at GOV.UK. See our editorial & sourcing policy. Free to use in UK classrooms under Creative Commons CC BY 4.0 with attribution to UK Tax Drag.