Paying tax in a band

[jonsebass]

Hello,

A lot of venues we are playing at the minute are asking for us to sign receipts for tax purposes. This hasnt happened to us before.

What are the implications of not declaring the £50 odd quid a night I make from gigging to the tax man? Do I/We Need to? The £50 odd quid barely covers costs, let alone provides an additional income.

Thoughts please!

[chrismuzz]

[quote name='jonsebass' timestamp='1337893571' post='1667198']
Hello,

A lot of venues we are playing at the minute are asking for us to sign receipts for tax purposes. This hasnt happened to us before.

What are the implications of not declaring the £50 odd quid a night I make from gigging to the tax man? Do I/We Need to? The £50 odd quid barely covers costs, let alone provides an additional income.

Thoughts please!
[/quote]

As illegal as it is, I've never declared any of my takings from gigs either. I get buggered by the tax man from my full time job as it is! They're not touching the odd £35 quid i get ontop every few weeks

[jonsebass]

My thoughts exactly!

Ive considered doing things like keeping Petrol receipts, and receipts for strings, straps, picks etc just to prove that its for expenses and not additional income. I play maybe once/twice a month for money

[BILL POSTERS]

Keep receipts for absolutely everything you spend thats band or even music related. In case you ever have to prove your expenses, And get someone else to sign whenever you can. I know a guy who takes Donald Duck with him just for that very purpose....

Edited May 24, 2012 by BRANCINI

[jay]

I'd be over the moon if I ever made enough money from a band that I had to worry about tax!

[Roland Rock]

Only your profit is taxable, so if the £50 barely covers costs, you would only need to declare the little bit that is left over as taxable income. Don't forget that bass gear is an overhead too, so it may be quite a while before you technically make any sort of profit.
In other words, I wouldn't bother. The revenue ahave bigger fish to fry.

[chrismuzz]

[quote name='Johnston' timestamp='1337893925' post='1667214']
If you do it right you can get a rebate from your day to day earnings.
[/quote]

Tell us more!

[TimR]

I think you'll find it's for VAT reasons. If they're paying you cash they need to cover themselves. Don't worry about it. Just keep a copy.

Unless you make £100 a week it's unlikely that you turn a profit from gigging.

[Roland Rock]

[quote name='chrismuzz' timestamp='1337894472' post='1667222']
Tell us more!
[/quote]

Not sure if this is what Johnston means, but you could say that bass playing is one of your business activities along with the day job. After factoring in your gear costs plus expenses, you're likely to make a fair loss. this can be offset against any taxable income from your day job, hence lowering your overall tax bill.

[icastle]

Had this a few times.
I just scrawl something that may or may not be a signature.

[TimR]

You have to show that you are trying to make money out of it. AFAIK if you fail to make a decent profit 5 years in a row they view it as a hobby.

Edited May 24, 2012 by TimR

[chrismuzz]

[quote name='Johnston' timestamp='1337894983' post='1667230']
Dunno the ins and outs but know a few who balanced things like small farms off their day jobs. Basically a decent accountant and keep the receipts for gear. One guy in particular only had a few head of cattle but when the two were put together he only paid a few quid tax. He even swapped jobs, halfed the hours and was no worse off. The only real reason he kept the wifes families farm going was he hated paying tax

Basically keeping yourself legit and legal can work in your favour and at the worst HMRC goes and tells you to bugger off it's a hobby, eventually apparently
[/quote]


[quote name='Roland Rock' timestamp='1337894999' post='1667231']
Not sure if this is what Johnston means, but you could say that bass playing is one of your business activities along with the day job. After factoring in your gear costs plus expenses, you're likely to make a fair loss. this can be offset against any taxable income from your day job, hence lowering your overall tax bill.
[/quote]

interesting... I spend at least 1k a year on my *ahem* business activities.. Might try my luck at claiming GAS as tax deductible

[jonsebass]

All seems to echo what i pretty much thought..keep it coming though!

[WalMan]

I really should knuckle down & do that wiki but then stuff gets in the way.

Somewhere back down the line there is a thread on this very subject.

If all you are doing is low paid pub gigs then chances are you are not making a profit after consumabless (strings, batteries, petrol / motor expenses to gigs & r/h, etc)

You should keep all relevant receipts (anything you spend re your musical business) but note that you cannot claim those three bottles o champagne, or the gram of toot.

Instruments & amps are capital items and you can effectively claim the cost against tax through capital allowances and the annual investment allowance (up to £25k a year) BUT remember that when you sell the bass / amp / pedal because of GAS what you receive for it comes back in as income.

For motoring expenses rather than keep receipts for every litle item you can instead claim as a mileage allowance based on 45p / mile for the first 10k business miles & 25p per mile thereafter.

If you end up with a loss at the end of the year then you might look to set it off against other income, BUT HMRC will expect you to turn a profit at some point fairly soon an if you do not will say that you are not trading with a view to making a profit and cannot set the losses off only carry them forward til you mahke a profit. They could even try to go back and withdraw relief for earlier years.

Fo a busy function band then all the same applies, but quite probably you will be making profits each year in which case you should be submitting returns & paying tax.

Main thing is:[list]
[*]Keep a note of all income you receive
[*]keep all relevant receipts
[*]look at it every year
[/list]
If it is small scale / no real profit any year and you submit a tax return for some other reason then make a note in the box for "Other Information" on page 6 that you receive some income as a musician each year, but that income is small, generally exceeded by expenses and that you basically consider it a hobby and have not included details or claimed losses but will advise HMRC if the situation changes in the future.

If you are making a profit then you should be reporting it to HMRC and paying the tax.

Edited May 24, 2012 by WalMan

[WalMan]

[quote name='TimR' timestamp='1337894747' post='1667226']
I think you'll find it's for VAT reasons. If they're paying you cash they need to cover themselves. Don't worry about it. Just keep a copy.

Unless you make £100 a week it's unlikely that you turn a profit from gigging.
[/quote]No its not for VAT, it's for tax so they[list]
[*]have something to show the tax man to prove they have paid out, and
[*]with the chain pubs like GreeneKing (who seem to be the worst and want you to give them a receipt AS WELL AS their own paperwork) to keep the accountant happy and prove that they should not be treating you as employed staff
[/list]
As for your second that is quite possible but you should still keep the receipts and check for yourself in case, and to have the back up

[BILL POSTERS]

[quote name='Johnston' timestamp='1337895664' post='1667250']
Do accountants do the first appointment free like solicitors?
[/quote]
[quote name='Johnston' timestamp='1337895664' post='1667250']
Do accountants do the first appointment free like solicitors?
[/quote]

Unless your earning a fair bit, its probably not worth bothering. Probably end up owing the accountant more than the HMRC.

From personal experience most accountants would just milk it, do sod all you couldnt have done yourself, and charge you dear for it.

[WalMan]

[quote name='Johnston' timestamp='1337895664' post='1667250']
Do accountants do the first appointment free like solicitors?
[/quote]Do you do free try out gigs for pubs? Actually you may well find quite a few who do, thogh it'll be general advice as they have to go through all the money laundering "know/identify your client" before they can really start to do anything for you.
[quote name='BRANCINI' timestamp='1337898051' post='1667314']
Unless your earning a fair bit, its probably not worth bothering.
[/quote]Quite probably true, though they may well give you some pointers to things you didn't realise you could claim.

Treat HMRC advice centre / help lines with care. They are only there to assist, not give advice. Indeed there was a recent tribinal case of a radio presenter who initially took advice, a lot of which appeared to be incorrect or only partially true, where HMRC later enquired and she ended up with a large additional bill for tax & the tribunal could only assist in part for the very earliest years.
[quote name='BRANCINI' timestamp='1337898051' post='1667314']Probably end up owing the accountant more than the HMRC.

From personal experience most accountants would just milk it, do sod all you couldnt have done yourself, and charge you dear for it.
[/quote] Again quite possibly true, but if you do use an accountant then ask them early on what information they will need from you and how they want it presented. If you rock up with a couple of Tescos bags stuffed with every receipt and bank statement you have collected over the previous year in no semblence of order and expect them to pick the bones of the business accounts out of them, then be prepared for a big bil, or to be told to go away and have a go a sorting the wheat from the chaff and everything into some sort of order that they can work with

[simon1964]

[quote name='BRANCINI' timestamp='1337898051' post='1667314']
Unless your earning a fair bit, its probably not worth bothering. Probably end up owing the accountant more than the HMRC.

From personal experience most accountants would just milk it, do sod all you couldnt have done yourself, and charge you dear for it.
[/quote]

I have to use an accountant for my "proper" job. They advised me that the amount I earn from giggng once or twice a month is so small that the Revenue would treat it as a hobby rather than a business. Mainly because if they treated it as a business, I would probably be able to show a loss and claim tax back!

[bassace]

At the very least, however infrequently you play, keep records - a simple 'exercise' type book will do it - of every gig you do. Record the cash received, the mileage you travelled, and stick £5 in for sarnies. You may also want to do something about capital depreciation of your gear but you'll need the original receipt. Then a few expenses - batts, strings etc. At the end of the year you'll probably have made a loss but if there's a small profit coming up see if you can add to your expenses or get a small item of gear to balance the books. Then put the book away and do nothing. You won't have a profit, or if you have a loss just forget it; don't try to offset it. But keep records, that receipt you signed could just come back and bite you one day. Also remember, even if you get cash even that will be recorded in the payer's accounts. The only 'safe' cash is from the bride's dad! And I even record that.

[WalMan]

[quote name='simon1964' timestamp='1337932410' post='1667492']
I have to use an accountant for my "proper" job. They advised me that the amount I earn from giggng once or twice a month is so small that the Revenue would treat it as a hobby rather than a business. Mainly because if they treated it as a business, I would probably be able to show a loss and claim tax back!
[/quote]Precisely. But keep your receipts anyway. If you are having to make tax returns then there may come a time when HMRC review the return and having the backup to prove that point will save problems.

Whether you make a "white space" note to that effect on your return in an endeavour to limit the possibility opening closed returns by way of "discovery" of you new source of income as a musician is for them to advise and you to decide at the end of the day

[paul torch]

Probably been said already but...

Keep all receipts for every expense (equipment, rehearsal space, travel etc). If you are only getting £35-£50 per gig then you are probably running at a loss. These losses can be offset against any other earnings (PAYE jobs) enabling you to claim a tax rebate. Bit of a pain I know but you could end up quids-in.

[WalMan]

[quote name='paul torch' timestamp='1337933679' post='1667509']
Probably been said already but...

Keep all receipts for every expense (equipment, rehearsal space, travel etc). If you are only getting £35-£50 per gig then you are probably running at a loss. These losses can be offset against any other earnings (PAYE jobs) enabling you to claim a tax rebate. Bit of a pain I know but you could end up quids-in.
[/quote]Although the chances are that HMRC will (or should) if not immediately then within the first few years of such claims knock you set off claims back on the grounds that you are not "trading with a view to a profit".

[WalMan]

[quote name='hiram.k.hackenbacker' timestamp='1337934131' post='1667515'][list]
[*]save your gig money and buy a new bass every year - you can't have too much equipment to claim back against
[/list]
[/quote]
But beware. As above this is capital, so when you eventually give up, and if/when you sell basses, the proceeds come back in as income and are taxable

[paul torch]

[quote name='WalMan' timestamp='1337934215' post='1667516']
Although the chances are that HMRC will (or should) if not immediately then within the first few years of such claims knock you set off claims back on the grounds that you are not "trading with a view to a profit".
[/quote]

Interesting. I wondered that myself as I was running a visual design service for some years and there was a cross-over period where that and a PAYE job where running side-by-side. As the years went on I was doing more PAYE work and less freelance work but still had the general day-to-day expenses of running my business, though by this time it was not turning a profit. i submitted my tax-returns (legitimately) and there was a section that asked if I wanted to offset any losses against any other earnings. I did and received a rebate for a number of years before winding up the business as I realised the PAYE work was becoming a full-time venture. I wasn't trying to pull a "fast one".

As it happens I am now trading full time as self-employed due to a twist of fate.

Edited May 25, 2012 by paul torch

[paul torch]

[quote name='hiram.k.hackenbacker' timestamp='1337934627' post='1667522']
....oh, and I forgot to mention[list]
[*]whatever your view of HMRC may be, if you have cause to ring them up as I have done once or twice, if you speak to them like they are the enemy you will be treated likewise. If there is genuinely something you don't understand they will explain it to you in simple terms when asked. All the conversations I have had with them I have learnt from.
[/list]
[/quote]
this.

they are generally alright people who are there to help.