Self employed musos - What are YOU claiming for?

[Moos3h]

Hi all,

This will be my third year of having to submit a tax return, largely because I have done other jobs as a Photographer which I have received payment for. However, I also declare the meagre gig earnings (about £50-60 a pop for the weekend pub gigs) which totals less than a few grand spread over the year, inclusive of some functions which crop up every now and then. I'm hardly making a fortune from this!

My accountants that help me with my return have historically helped me include receipts for the obvious, basses, amps etc. but what else can be included? I claim for petrol too, to and from the gigs.

I really don't want to take the mickey, as I believe if you mess with the Inland Revenue, they'll mess with you in return - I want to be straight with all of this, but likewise if there IS something that can be written off quite honestly, then it'd be nice to know.

Any of you guys in a similar position?

Cheers,
James

[phil.i.stein]

[quote name='Moos3h' post='785236' date='Mar 24 2010, 10:12 PM']Hi all,

This will be my third year of having to submit a tax return, largely because I have done other jobs as a Photographer which I have received payment for. However, I also declare the meagre gig earnings (about £50-60 a pop for the weekend pub gigs) which totals less than a few grand spread over the year, inclusive of some functions which crop up every now and then. I'm hardly making a fortune from this!

My accountants that help me with my return have historically helped me include receipts for the obvious, basses, amps etc. but what else can be included? I claim for petrol too, to and from the gigs.

I really don't want to take the mickey, as I believe if you mess with the Inland Revenue, they'll mess with you in return - I want to be straight with all of this, but likewise if there IS something that can be written off quite honestly, then it'd be nice to know.

Any of you guys in a similar position?

Cheers,
James[/quote]
TBH your accountants are the key..they know the ins and outs.

there are also the 'other' breed of accountants. they work for the government, i think ...

[OutToPlayJazz]

I terms of the car/fuel, I claim the mileage allowance, as I usually do up to or above 40,000 miles a year. That takes care of a lot of it. I also claim for all the sheet music I buy (another not insubstantial amount) & claim the cost of instruments I use professionally.

Some people take it as far as claiming a percentage of heating and lighting for teaching at home, DJ's, shirts, etc & even meals while out playing. I don't bother with any of that, though. The mileage allowance alone gives me around £12k of earnings tax free, so it's good to know the in's and out's. Read all the small print you can find on the self-employed pages on the Inland Revenue sites.

Rich.

[freefaaall]

To be honest, if you're paying an accountant then they should be earning their money by advising you what you can claim for in order to reduce your taxable income. As Rich says, the mileage allowance, 40p/mile for the first 10k miles, 25p/mile after that is a good place to start. But remember, if you claim the mileage allowance you cannot claim ANY other motoring expenses. As before you can claim a capital allowance on equipment used in the course of your trade. However, rather than writing things of at a fixed % over the years, you can now claim one off deductions, up to a total of £100k / pa (I believe).

Cheers

James

ps Rich - That S2 5 is gorgeous!

[leftybassman392]

Basically, any cost that you can reasonably claim to have incurred in conducting your business is fair game. There are some good advice pages on the HMRC website, and you could do worse than start there.

If it helps, here's a brief outline of some of the things I claim for:

My principal source of income is from teaching - I teach Guitar and Bass in all styles, which means I need to own numerous instruments in order to conduct this area of my business. Every instrument I own therefore goes into the pot (along with all my amps and other associated gear). Because most such items count as business assets, you can't claim for their full cost.

As part of this work I need to travel across quite a large geographical area, so I claim for the numerous costs incurred in using my car (not just fuel, but maintenance/servicing costs, and indeed the cost of the car itself). However I also use the car for other things, so I claim a percentage of these costs - in my case it's 70% - as long as it's a fair estimate of your pattern of usage you'll be ok.

I also teach from home, so I can claim a portion of the running costs of the house as well - utilities, phone, council tax, etc. Usually calculated on the use of a single room, as a fraction of the total number of rooms in the house (other than bathrooms, cloakrooms, etc.)

I also earn income from public performance, so I claim for my P.A. (I can't claim for my instruments again 'cos that's illegal!)

I also have a small recording facility at my house, and because it's used in connection with my business activities I can claim for the entire contents of the studio, even if (as at present) I'm not actually using it.


There's a whole bunch of other stuff as well, and money spent on a decent accountant is definitely money well spent. One of his/her first duties should be to tell you what you can claim, and another should to make sure you're clear on the difference between revenue expenditure and capital expenditure.

The bottom line is this - if and when HMRC decide to look at your books, anything you have claimed will be ok as long as you can reasonably justify it in terms of it's contribution to your business activities.

Edited March 24, 2010 by leftybassman392

[Musicman69]

Not discounting any of the above the bottom line is.. revenue want to see returns from bona fide accountants, and they will advise you to just pay enough to keep revenue off your back, the law of the jungle still applies! Unless youre skint or making a fortune that is.

[lowdown]

This is on the list from my accountant [Chartered], and she has been my accountant
For over twenty years, she will put this in regularly every year and it seems
To keep the Taxman happy.
I am a full time Muso, which includes playing Bass and Writing and selling production Music for anything media based. [No teaching]

Use of residence as office [Inc Home Studio]
Music, CDs, DVDs and Videos
Small items of equipment
Telephone [business only]
Post, stationary and advertising
Travel and accommodation
Motor expenses
Computer and website consumables [Inc hardware and associated software]
Clothing and appearance
Instrument maintenance and repairs
Trade reference materials
Sundry expenses
Accountancy
Professional fees

Of course all receipts need to be provided.
I know plenty of full time Musos and this seems to be about the norm,
[Give or take a couple]

Good Accountant [chartered] is well worth it.

Garry

[Moos3h]

Thanks guys, some interesting reading - I think my accountant has mentioned some of the stuff that's here, but because I'm only a glorified weekend warrior, there is some stuff that I think would be pushing it.

The good news is that this year, I've been investing in the PA a bit so I do have quite a few receipts for big bits of gear which I've bought, so I can't see me making much, if anything!

Cheers,
James

[jakenewmanbass]

Moosh, I think the main benefit you will find from declaring your self employed income is that it may reduce your liability from your full time earnings. This stems from the fact that in order to declare your music income, in your self assessment return you need to have a 'self employment' which allows you to detail to them 1. what you have earned 2. what it has cost you to earn it.
So I would suggest you look carefully at what your *'allowable expenditure' is and make sure it goes in against your *'turn over'. If you do a full and proper breakdown from income and expenditure you will probably find that your profit is not huge and it is this factor that makes the difference to your entire tax bill. As tax is calculated on a percentage basis your gig work produces a little vacuum, as it were, in your overall tax liability and the vacuum is filled from your main income (your job) ultimately if the vacuum is big enough you will get a tax rebate.
I personally don't think it worth using an accountant for this small amount of earnings as there are some very able minded posters here who will give you really good advice and any benefit I have alluded to may well be taken up by an accountant fee. If you already use one for other matters then of course it makes sense to give them this workload.

* allowable expenditure is what is in Garry's list above (pretty much covers it I think)
*Turn over is your total earnings before allowable expenditure is taken off... leading to profit which is what your liability is calculated on.

[jakenewmanbass]

[quote name='Moos3h' post='785479' date='Mar 25 2010, 08:35 AM']Thanks guys, some interesting reading - I think my accountant has mentioned some of the stuff that's here, but because I'm only a glorified weekend warrior, there is some stuff that I think would be pushing it.

The good news is that this year, I've been investing in the PA a bit so I do have quite a few receipts for big bits of gear which I've bought, so I can't see me making much, if anything!

Cheers,
James[/quote]

Just be aware that large items (termed machinery) are claimed for as a capital allowance which a attracts a 50% first year allowance and 25% in subsequent years...
Put simply you can't claim for the whole of it in the year of purchase.