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The basic artist tax advice for the music industry

We've updated this guide on 9th March 2021

If you’re just starting your career as a musician, then it could be beneficial for you to get some basic artist tax advice on how it works within the music industry.

Basic artist tax advice: where to start

One of the best places to start when it comes to tax is knowing if you’re classed a sole trader or employed. For most people and artists who work in the industry, the majority will not be in a full-time salaried job.

A survey conducted by The Musician’s Union found that 94% of musicians work as freelancers for all or only part of their income.

If you’re starting out as a self-employed musician, then it’s vital you understand the ins and outs of Self Assessment tax. Likewise, if you’re part of a band then you need to know exactly how much tax you pay as an individual. So, how do you know exactly?

Who should register as self-employed?

Most musicians can usually be sorted out into one of these three categories:

  1. Music is your hobby or your interest. You perform or create it purely for the love of it.
  2. You’ve got a salaried job that provides the majority of your income, and music is a side activity that earns you money.
  3. You are a full-time musician. Most of your income comes from your role in the music industry.

The lines can blur, but the bottom line is that if you fall into either 2 or 3, then you should be paying tax on your earnings. You’ll be required by law to register with HMRC and complete a Self Assessment tax return at the end of each tax year. After registering, you’ll be given access to an online platform. From here, you can make an annual tax payment for your National Insurance and Income Tax – but only if you’ve earned over the minimum tax allowance threshold.

But are things different if you’re part of a band? Well, unless your group is tied together under a contract, label or limited company, then you’ll still count as separate sole traders by HMRC. Each member must file their taxes individually.

What will I pay tax on?

As we already mentioned, you pay both National Insurance and Income Tax through a Self Assessment tax return. If you are earning over £6,515 a year, you will be required to pay class 2 or class 4 National Insurance contributions alongside income tax.

HMRC will calculate how much Income Tax you need to pay based on the following:

  • Any earnings from gigs or concerts
  • Tips or bonuses paid to you by a venue
  • CD, vinyl or online stream sales
  • Merchandise
  • Money earned from busking

As a self-employed musician you’ll be solely responsible for keeping a record of your earnings. You must also ensure that you pay the correct tax to HMRC based on your income. 

Keeping detailed records of your finances and earnings will make filing your Self Assessment tax return much easier, as well as potentially saving you money in the long run. Be aware that if you don’t declare all your earnings, you can land in hot water with HMRC and be liable to pay some hefty fines!

Artist tax advice on expenses

Being self-employed means that you get the benefit of claiming back some costs through expenses. And there are a lot available for musicians.

What qualifies as an expense in the eyes of HMRC can be very broad, and differs from job to job. As long as you can prove that it is either ordinary or necessary for the operation of your business, then you can claim money back on it. Some examples of tax deductions available for musicians are:

  • 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

To make expense claims, you must keep all evidence of transactions, such as receipts and invoices to give to HMRC. You should also be cautious; HMRC does all it can for necessary expenses, but they do not allow for luxury.

How do I do my Self Assessment?

The deadline to register for Self Assessment is the 5th October in any given year. You’ll then need to complete a tax return by 31st January following the tax year that you worked in. There are a few ways you can complete your Self Assessment tax return:

  1. Do it yourself on HMRC here. It’s free, but if it’s filed incorrectly then you could end up paying a nasty fine!
  2. Pay an accountant to help you, but the price can vary.
  3. Give TaxScouts a go! Here are a few of reasons why:
    • We’re £119, all in
    • We also have a UTR registration service for £25
    • Get your own personal accountant, without the added cost

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