These tips are not for the purpose of providing tax, financial or employment advice. You should consult HMRC for advice on specific matters. Self-employment for artists usually makes the most sense – when you are earning megabucks, ask your accountant about the best way to go about things. This will cover sales of your works, one-off jobs, temporary contracts, freelance work, and awards. If an employer is not paying tax for you, you have to pay it.
If you are registered as Self Employed, every year you will need to fill in a tax return (Self Assessment form) to notify HMRC:
- how much you have earned as self-employed
- how much you have earned where tax has already been taken off (from your P60)
- expenditure on your business (eg: studio, materials, phone, internet, equipment, travel, professional fees, etc.)
- They will calculate what profit/loss you have made and how much tax you owe.
- It is easiest to do all this online. If you are lucky enough to be able to forge a living wage from your work, get a good accountant. A good accountant, and preferably one who has knowledge of working within the arts, will save you money and hair-pulling when it comes to completing your tax return. If you can afford one, get a bookkeeper to deal with your day-to-day paperwork and finances. This will allow you to think about your creative output rather than your taxi and lunch receipts! Accountant’s fees, like other professional fees to support your practice, can be offset against your income. If you aren’t earning enough money to justify the expense of an accountant, make sure you keep good, clear records of your earnings and expenses. DO keep monthly accounts – a simple spreadsheet of your outgoings and incomings will suffice, along with copies of any invoices. Keep all expense receipts in one place and preferably make sure you check these against your accounts on a monthly basis – again, this will save you time and hair-pulling once the deadline for your tax return comes around.
Also bear in mind that HMRC can audit anyone self-employed at any time and that they WILL want to see good, clear finance records and can fine you if you are not able to demonstrate that you have the right paperwork. Take the time to look up taxable expenses on the HMRC website – you may be surprised about what you can and can’t claim as taxable expenses, particularly if you work mainly from home. If you think you aren’t earning enough to go to the trouble of registering as self-employed, DO bear in mind that any company that has paid you for work can be audited by HMRC. An audit will mean checking all payments made to performers or artists and may mean HMRC checking to find out if you have declared your earnings.
DO keep enough money aside to pay your taxes – sadly, HMRC may not be very sympathetic if you don’t have enough money to pay taxes due at the end of the year, and you may be fined for late payments (with interest!).
HMRC Notes on registering as self-employed
www.hmrc.gov.uk/selfemployed/register-selfemp.htm
HMRC Notes on Self Assessment: www.hmrc.gov.uk/sa/index.htm
Business Link’s Guide: www.adviceguide.org.uk/england/life/tax/income_tax.htm
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