Accounting services for Musicians
Our qualified accountants have many years experience in submitting Musicians’ accounts to HMRC, whether you are performing for a national orchestra, teaching music, playing in a wedding band or looking to be the new Ed Sheeran or Lady Gaga, our accountancy services ensure you pay the right levels of tax.
The first important question – are you employed or self- employed? If you don’t work for an organisation e.g. the BBC or are assigned to a record label or under contract you are likely to be self -employed. The same is true even if you are part of a band – unless you are tied together under contract, label or operating as a limited company.
Our tax experts will determine if your income from self employment should be referred to as trading income. We manage your account so that you will pay any tax due twice a year through the Self Assessment system.
Your dedicated tax accountant will help you if you are working on multiple contracts in the UK and abroad. Our experts will assist you with both optimising your tax so you only pay what is due and are fully compliant with the law. Nobody wants an HMRC investigation but with the complexity of UK tax law it is very easy to get yourself in to trouble and we aim to give our clients piece of mind.
‘Axia have really helped with my affairs, being dual resident in both the UK and the US my affairs can be very daunting and complicated, but they have always managed to advise in the best way possible. I would highly recommend Axia as an accountancy firm to anyone looking for a professional and consistent service.’
Jamie Sanderson (Sermstyle) – Singer/Songwriter
Working as a musician your income can come from a variety of sources e.g. gigs, busking, CD or Download sales – all must be accounted for.
HMRC must ensure people are correctly classified as being employed or self-employed. The exact rules to determine the position are defined by HMRC and our tax expert will assist you in correctly registering.
In exceptional circumstances, some musicians may qualify for what is termed Reserved Trading Income Status (previously known as Reserved Schedule D Status). They will continue to be taxed on income as if they were self-employed so long as tax liabilities are properly discharged and there is no break in their employment.
What expenses can a Musician claim?
Expenses are defined as being necessary for the operation of your business. We have provided a list of typical tax deductions available for musicians:
- Marketing costs – Flyers, posters, etc.
- Website costs – Hosting and maintaining a website to promote your music.
- Travel expenses – Train tickets, petrol costs.
- Accommodation – Hotels during overnight trips.
- Instruments – Guitars, drums, cellos or even a washboard!
- Instrument repairs – Fixing equipment if it becomes damaged and stops you from performing.
- Production equipment – Laptops, editing software.
- Gig equipment – Sound equipment, lighting, microphones.
- Instrument insurance – Protect your livelihood.
- Recording fees – Studio rental, rehearsal room hire.
- Commissions – Fees paid to agents for gigs.
- Music – Backing tracks, sheet music.
- Band purchases – Understanding how to expense an item you buy as a group e.g. new sound system or lighting.
If you are self-employed and work from home then we can advise you household costs which can be offset including heating, using a room as an office and phone services.
The United Kingdom has Double Taxation Agreement with many countries. It is your responsibility to minimise the tax paid in the other country and we can help you do this. If a tax can be avoided or reduced, and the taxpayer does not take action to organise this, HMRC can deny the relief and it is our job to ensure this doesn’t happen.
If a country is not covered by the Double Taxation Agreement we will advise you to ensure you are compliant and therefore don’t pay more than you need.
What are the top mistakes Musicians make on their tax returns?
A common error is to show income after deduction of agent’s commission and VAT. Gross income, before deductions, should always be shown, with a separate claim being made for the commission and VAT costs.
Recently a potential new problem cropped up, in the form of the new cash basis, described by HMRC as simplified expenses. Opting for this denies musicians the ability to set losses off against other income, and limits certain claims to expenses. The earnings basis where income is declared as earned, rather than as received, and where expenses are declared as incurred allows more flexibility.
To find out more about how The Showbiz Accountant could help your business, call Keith Rennie (Managing Partner) in the UK on: 0203 384 2224.
To schedule a call or email a question please click here.
We look forward to hearing from you. please read our Musician related Blogs below for more information: