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Enjoy the sound of success
As a sound engineer, the noise you don’t want to hear is that of your hard-earned money slipping down the drain. So, you need to be sure that you’re paying the right levels of tax, whether you’re working in your own studio or you’re on tour.
That’s where we come in. We can’t make you rich but we CAN help you to make the most of the money you earn. We’re experts – we know the ropes because we’ve been helping sound engineers with their accounts for many years. Our job is to make life easier for you whilst helping you to keep as much money as possible from all your hard work.
So, how can we help?
- We’ll ensure that you’re correctly registered as employed or self-employed in line with HMRC rules. If you’re self-employed, we’ll check if any income should be viewed as trading income; and if you’re employed, we’ll ensure that the correct tax is deducted at source.
- We’ll sort out your accounts – for instance, helping sound engineers who work on multiple contracts in the UK and abroad is second nature to us.
- We’ll make sure that you only pay the tax that’s due – and that you also avoid getting into trouble and facing an HMRC investigation (not a nice thought!)
Fine-tuning your finances
There are other ways in which we can help you to keep hold of your money rather than see it drain away unnecessarily:
- We’ll help to ensure that all your income sources (e.g. from one-off events through to long-term contracts) are accounted for.
- If you work abroad, we’ll ensure that any tax you pay in another country is either minimised or avoided wherever possible. This is particularly important in the UK which has Double Taxation Agreements in place with many countries.
- We’ll take you through the wide range of expenses that are tax-deductible.
- We’ll help you to avoid the pitfalls that could lead to errors on your tax return, could reduce the expenses you could claim, or could prevent you from setting any losses against other income. For example, choosing earnings rather than the new cash basis enables sound engineers to set losses off against other income.
Income streams
Working as a Sound Engineer your income can come from a variety of sources e.g. one-off events to long term contracts – 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 sound engineers 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 Sound Engineer claim?
Expenses are defined as being necessary for the operation of your business. We have provided a list of typical tax deductions available for sound engineers:
- Marketing costs – Promoting yourself to bands and studios with flyers.
- Website costs – Hosting and maintaining a website to promote your capabilities.
- Travel expenses – Train tickets, petrol costs.
- Accommodation – Hotels during overnight gig trips.
- Studio equipment – If you built your own studio it is likely to be treated as capital
- Computing equipment – Laptops, specialised audio software.
- Equipment repairs – Fixing equipment if it becomes damaged.
- Equipment Insurance – Protect your livelihood.
- Commissions –Fees paid to agents for gigs.
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.
Working abroad
The United Kingdom has Double Taxation Agreements 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 on ensuring you are compliant and don’t pay more than you need.
What are the top mistakes Sound Engineers 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 Sound Engineers 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.
Next steps
To find out more about how The Showbiz Accountant could help your business, call Keith Rennie (Managing Partner) in the UK on: 0203 972 0155.
To schedule a call or email a question please click here.
We look forward to hearing from you. Please read our Sound Engineer related Blogs below for more information: