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How to do a musician tax return

We've updated this guide on 8th December 2020

If you’re registered as self-employed and earn money from your music, then you’ll probably have to complete a musician tax return. This type of tax return is called a ‘Self Assessment,’ which must be completed every year, and it requires you to deduct tax yourself from your earnings.

Completing a tax return may seem confusing and complicated, but it doesn’t have to be! We’ve put together a handy guide on how to complete a tax return if you’re a musician, and everything else you need to know about self-employed tax. 

What is Self Assessment?

If you’re paid a wage by an employer, Income Tax is usually deducted directly from your wage, pension and savings. However, the way tax is collected is different if you’re a self-employed sole trader. 

Self-employed workers are required to report on how much Income Tax they owe every year through a Self Assessment tax return. Most musicians will be considered sole traders in the eyes of  HMRC, unless they’re part of a band or group that is tied together under a contract, label or limited company.

When is the deadline to register for Self Assessment?

If you need to register for Self Assessment, the deadline to do so is the 5th October in any given year.

If you’ve recently started working for yourself, then you must register for Self Assessment to let HMRC know that you are self-employed. If you don’t, then you could end up paying a hefty fine as a result. You’ll then need to complete a tax return by 31st January following the tax year that you worked in.

What information do I need to include on my tax return?

To put it simply, you need to declare any income you’ve received that tax year, as well as business purchases and expenses. HMRC taxes you on your earnings minus any qualifying expenditure (such as your profit).

One of the benefits of sorting out your own tax is claiming back some of your costs as expenses. As long as you can prove that it’s a business expense, you can pretty much deduct anything. This includes:

  • Fuel and travel costs (for going to gigs or performances)
  • Instruments and equipment
  • Advertising and promotion costs
  • Any stationary or office equipment
  • Clothing purchased specifically for your performance
  • Business bank account charges

Keeping detailed records of your finances will make filing your Self Assessment tax return much easier, as well as saving you money in the long run. It’s also important to keep a record of what you spend so it can be used as evidence for claiming expenses back.

HMRC might ask you to provide:

  • Invoices/ record of income
  • Mileage records
  • Cashbooks
  • Bank statements
  • Purchase receipts
  • Your P60 if you are also employed

As a self-employed musician you’ll need to keep all these records for at least 6 years.

What will I pay on my tax return if I’m a musician?

The amount of tax you pay as a musician depends on how much you earn each tax year. Even if you only play a couple of gigs alongside your full-time job, then you still might be required to complete a tax return. 

The Trading Allowance allows you to earn up to £1,000 a year tax-free. But if you earn more than £1,000 a year from your solo music career, then you’ll need to complete a tax return. You pay tax at the usual rate that you pay your salary. 

If self-employed music accounts for your full-time income, then it works out slightly differently. You’re required to pay:

  • Income tax
  • National Insurance: either Class 2 or Class 4

National Insurance must be paid, even if you earn below the £12,500 Personal Allowance threshold. If you’re not sure what NI contributions you need to make, you can work it out yourself. Try our National Insurance Calculator!

Annual self-employment income
£
Self-employment expenses
£
Select tax year
How NI is calculated on your income
No contributions
£9,500
At 9%
£39,500
NI contributions you need to make
£3,714
Class 2 NI: £159
No Class 4 NI on your first £9,500
Class 4 NI at 9% on your next £39,500: £3,555
You also need to pay income tax
£7,300
View how the income tax is calculated

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How your National Insurance contributions are calculated

As a self-employed you have to pay your National Insurance contributions yourself during your annual Self Assessment, together with any income tax you might owe.

National Insurance breakdown

You pay no NI contributions on the first £9,500 that you make.

You will need to pay Class 2 NI worth £159.

You will also have to pay £3,555 (9%) on your income between £9,500 and £49,000.

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