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Marbury
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Expenses for self employed in audio
      #1026487 - 31/12/12 06:04 PM
I am self employed with music and audio as my main income (photography as another). I keep a record of all my expenses used for production or my work but I have recently purchased an ipad and continue buying music apps. As this was purchased as a music making tool with more software, able to make music on the move etc, track sales of media online - am I right in claiming this and the music related software as 100% tax deductible ? I am asking just in case anyone else is in the same boat. I am pretty sure I can but wanted to make sure as it's a new way of working for a lot of musicians and some don't class it as a pro music making tool which I do. Of course I can back it up with income from sales.

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Edited by Marbury (31/12/12 06:06 PM)


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Jack Ruston



Joined: 21/12/05
Posts: 4426
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026492 - 31/12/12 06:37 PM
Well, it's tricky. If it's entirely for music use and never anything else then you would put it through 100%. If you also use it privately for your own entertainment then you'd need to allocate a percentage. 50% is one they like. Obviously you could just claim for all of it but they might query that and you'd need to justify it.

J

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shufflebeat



Joined: 09/12/07
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026497 - 31/12/12 07:17 PM
If you have a laptop or other device that might occasionally be used for a business email but mainly for personal use I'd nominate the iPad as 100% business and the other to do all the stuff el Taxman might consider questionable. Whether that's how it works in reality is up to you. I can't imagine any of the very reasonable folks I've dealt with questioning that unless they suspected you for something serious (sneaky Porsche in the garage, etc), in which case they seem able to interpret the evidence as they see fit unless you have documentation to the contrary.

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Marbury
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026500 - 31/12/12 07:48 PM
I do have an office PC I also use for the net. What about the music apps ? Surely I can claim for all of them.

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Jack Ruston



Joined: 21/12/05
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026507 - 31/12/12 08:49 PM
Totally. Any app remotely to do with music, claim. But always imagine you're being inspected. If you also have a load of games on your iPad you're going to find it hard to justify.

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Marbury
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026508 - 31/12/12 09:09 PM
I did download a couple of games. One bought on a private bank account, the other a free download. As soon as I completed it i got rid of it. But on the whole hand on heart I can say it's all for music.

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Big Label Sound



Joined: 30/12/12
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026666 - 02/01/13 12:05 AM
You can definitely claim the items you mentioned. Just make sure you keep good records of all your purchases, receipts, etc. in case you are audited years in the future.

Two notes (may not apply to the original poster)-

1. Tax laws change every year. Check the max amount you can claim at one time. You might have to do yearly depreciation for some items over x amount in value.

2. You can only write off against business earnings. You can't buy $5,000 in music gear and write that off against your 9-5 job earnings. Just in case anyone thought of doing this...

3. A little off topic, but don't forget about the roughly 13% self-employment tax on your business earnings.

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hollowsun



Joined: 20/01/05
Posts: 5486
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026672 - 02/01/13 02:20 AM
Get an accountant. Might cost you a few bob but can claw in and save you considerably more. Mine does/did.

The tax system is terribly over-complicated and obfuscating and compounded by the fact that a lot of the people administering it don't understand it either. A half decent accountant can kick their arses such that the taxers won't dispute the odd thing here and there because they know your accountant can likely run rings round them whereas you as Joe Punter can't. Accountants do this all day, every day and if you speak to any of them, they will lament of their frustrations dealing with the revenue and how damned clueless they can be a lot of the time.

Claim the iPad as a legitimate expense - you bought it to separate virus-laden email and internet access and crap from your main music making PC which is your main source of income and has to be reliable. Games? You bought them to study the soundtracks as this is an area you're planning to move into ... or maybe developing apps of your own.

Etc..

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shufflebeat



Joined: 09/12/07
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026687 - 02/01/13 10:17 AM
Is there much of a business opportunity in soundtracks for cheap '70s comedy? I may have found a way to make my DVD collection tax deductible.

Fitness videos?

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The Red Bladder



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Re: Expenses for self employed in audio new [Re: hollowsun]
      #1026694 - 02/01/13 10:44 AM
Quote hollowsun:

Get an accountant. Might cost you a few bob but can claw in and save you considerably more. Mine does/did.

The tax system is terribly over-complicated and obfuscating and compounded by the fact that a lot of the people administering it don't understand it either. A half decent accountant can kick their arses such that the taxers won't dispute the odd thing here and there because they know your accountant can likely run rings round them whereas you as Joe Punter can't. Accountants do this all day, every day and if you speak to any of them, they will lament of their frustrations dealing with the revenue and how damned clueless they can be a lot of the time.




This advice is unbelievably important.

It does not matter at what level you are working, even if you are just turning over a few thousand a year, there is no way on this planet, that you will be remotely able to negotiate your way through what has become the most complex tax system on the World. There are literally hundreds of thousands of rules, regulations and exceptions, wheezes and schemes, incentives and special plans and even accountants have to form large partnerships just to have people in the office who understand the various parts of UK tax law.

Some of these rules are truly strange. Hairdressers' equipment is taxed differently to audio equipment, but only if it is leased. Books are taxed completely differently to magazines. If the book or magazine contains a CD or DVD, then it is taxed differently again. Your apps are software and the rules for software are different to the rules for pencils and different again to microphones or a computer.

For example - An accountant can increase your pension contributions without you having to actually move any money. By simply using an accounting 'trick' you can have a better state pension than the other guy.

I'm a great believer in DIY. I usually solve my own legal problems and I can build a house all on my own if I want/have to, I can fell trees, mix cement and change a gearbox, but I would never dream of trying to leave the house without an accountant!


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Marbury
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026706 - 02/01/13 12:23 PM
Like you say, it's only a few grand per year. I am not ripping up trees in earnings. I went on a course 3 years ago run my HMRC and basically all equipment etc for business use I was told is 100% deductable. There were no degrees of what you can claim.

I have no idea where to look for a decent accountant and how they would manage my "books" as all my incoming earnings are logged into my computer, not a physical book. Of course I have kept all receipts etc. I have not thought that what I earn yet justifies the cost of an accountant or are they also tax deductable ?

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Exalted Wombat



Joined: 06/02/10
Posts: 5366
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026721 - 02/01/13 01:29 PM
Quote Marbury:

Like you say, it's only a few grand per year. I am not ripping up trees in earnings. I went on a course 3 years ago run my HMRC and basically all equipment etc for business use I was told is 100% deductable. There were no degrees of what you can claim.

I have no idea where to look for a decent accountant and how they would manage my "books" as all my incoming earnings are logged into my computer, not a physical book. Of course I have kept all receipts etc. I have not thought that what I earn yet justifies the cost of an accountant or are they also tax deductable ?




Yes, accountancy fees are tax-deductable. But that only discounts them, it doesn't make them free!


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Marbury
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026728 - 02/01/13 01:46 PM
You mean discounts as in only a % .

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Exalted Wombat



Joined: 06/02/10
Posts: 5366
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026730 - 02/01/13 01:51 PM
Quote Marbury:

You mean discounts as in only a % .




I mean that it reduces the pool of earned income on which tax is calculated. You save the tax on that amount, not the whole fee!


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hollowsun



Joined: 20/01/05
Posts: 5486
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026738 - 02/01/13 02:29 PM
Quote Marbury:

I went on a course 3 years ago run by HMRC and basically all equipment etc for business use I was told is 100% deductable.



Well then, I am off to London Paddington's Left Luggage department because I have to rest my case!!

If that's what HMRC told you, they are wrong ... ish! And it shows how hopeless they are and how complicated the whole system is. "Tax needn't be taxing" my arse! The last incumbents paid some PR company £millions for that little slogan and it's bollocks. It needn't be if you're PAYE, etc., but any hint of self-employment and it can become very complicated.

If you spend £1,000 on a a computer or a new keyboard, guitar, whatever, it doesn't mean you can lob £1,000 off your tax bill. You can claim a percentage of it in the first year and a percentage of depreciation in subsequent years. If your electric and gas bill to run your business/sideline is £X,XXX a year, you can can claim a percentage of that (less if you work from home ... but then you get into issues like whether the local council view your home as business premises and so may charge higher council tax for that so what you might be able to get back on income tax you give away to someone else ... so you may want to forego claiming for that as it could work out more expensive in the long run ... but you might be able to claim against the increased council tax on your income tax). And it depends on whether you lease your gear or buy it - leasing can be more tax efficient but can cost more in overall outlay.

And so on.

Which is why I say "Get an accountant" - they (generally ... or should) know all this sh!t better than HMRC and they can (or should be able to) get them off your back with a phone call.

Listen to 'The Money Programme' on Radio 4...

Almost every week, HMRC's f'kwittedness is highlighted (and unsurprisingly, a spokesman for them is rarely, if ever, available). Millions of people are paying the wrong tax because the wrong code has been issued to them - some people are paying too much, others not enough and people are getting harassed and receiving threatening letters from them all the time (usually on a Saturday - they like to post those letters on the Friday because it gives the recipient time to cool off and roll over!).

Then HMRC discover those who are not paying the right amount (because they've been issued the wrong tax code ... or a temporary tax code was never revised) and then they get harassed to cough up.

I myself received a letter saying I owed them £7,000. The Mrs went to pieces (I laughed knowing they were completely wrong) but after a few days of being pushed from pillar to post and transferred here, there and everywhere, I got lucky - I spoke to one person there who knew his job. And he spotted that some box on my tax return was checked but hadn't been spotted. Turns out that they owed ME money!! But others would have just paid it, such is the fear that the blessed Revenue inspires.

Fed up with all this nonsense, I engaged an accountant. Within minutes, she spotted I had been overtaxed for several years and got me a substantial rebate. HMRC didn't see it - they were happy to take the money but had to eat humble pie the moment my accountant wiped the floor with them. And then the clueless f'kwits tried to tax me the next year on the rebate they paid me due to their incompetence. Suffice to say, said accountant kicked their arses again.

Repeat after me...

GET AN ACCOUNTANT!!!

Seriously! As Sir Red of Bladdershire confirmed, the tax system in this country is one of, if not THE most complicated in the world and you should not enter that murky world without suitable armaments. Yes, it will cost you some money but it can pay dividends.

As for finding one, Yellow Pages. Any decent firm will give a free consultation, maybe even advice - take it from there.

But for Joe Ordinary to take on the Revenue is like walking into a war zone naked and armed only with an empty water pistol! Accountants have tanks and Howitzers!!

And before anyone gets all hoity, it's not tax avoidance or tax evasion or immoral - it's paying the correct amount of tax and I'd say you have to be a complete fool to pay more than you have to. For example, would you walk into Greggs and pay £10 for a pasty just because some simpleton behind the counter tells you that's the price even though the pasties are marked as £1? I think not!

FWIW, I wouldn't pay £1 for a Greggs pasty but that's another story!

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Marbury
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Joined: 28/08/03
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Re: Expenses for self employed in audio new [Re: Exalted Wombat]
      #1026742 - 02/01/13 02:53 PM
Quote Exalted Wombat:

Quote Marbury:

You mean discounts as in only a % .




I mean that it reduces the pool of earned income on which tax is calculated. You save the tax on that amount, not the whole fee!





I spend say £400 on a new piece of gear for my studio. In the expenses section in the self assessment I key in £400. The calculation automatically deducts this from my taxable earnings. So if I have earned £12,400, the taxman calculates I have earned £12000 for the year.

Edited by Marbury (02/01/13 02:56 PM)


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Marbury
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Joined: 28/08/03
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Re: Expenses for self employed in audio new [Re: hollowsun]
      #1026743 - 02/01/13 02:54 PM
Quote hollowsun:

Quote Marbury:

I went on a course 3 years ago run by HMRC and basically all equipment etc for business use I was told is 100% deductable.



Well then, I am off to London Paddington's Left Luggage department because I have to rest my case!!

If that's what HMRC told you, they are wrong ... ish! And it shows how hopeless they are and how complicated the whole system is. "Tax needn't be taxing" my arse! The last incumbents paid some PR company £millions for that little slogan and it's bollocks. It needn't be if you're PAYE, etc., but any hint of self-employment and it can become very complicated.

If you spend £1,000 on a a computer or a new keyboard, guitar, whatever, it doesn't mean you can lob £1,000 off your tax bill. You can claim a percentage of it in the first year and a percentage of depreciation in subsequent years. If your electric and gas bill to run your business/sideline is £X,XXX a year, you can can claim a percentage of that (less if you work from home ... but then you get into issues like whether the local council view your home as business premises and so may charge higher council tax for that so what you might be able to get back on income tax you give away to someone else ... so you may want to forego claiming for that as it could work out more expensive in the long run ... but you might be able to claim against the increased council tax on your income tax). And it depends on whether you lease your gear or buy it - leasing can be more tax efficient but can cost more in overall outlay.

And so on.

Which is why I say "Get an accountant" - they (generally ... or should) know all this sh!t better than HMRC and they can (or should be able to) get them off your back with a phone call.

Listen to 'The Money Programme' on Radio 4...

Almost every week, HMRC's f'kwittedness is highlighted (and unsurprisingly, a spokesman for them is rarely, if ever, available). Millions of people are paying the wrong tax because the wrong code has been issued to them - some people are paying too much, others not enough and people are getting harassed and receiving threatening letters from them all the time (usually on a Saturday - they like to post those letters on the Friday because it gives the recipient time to cool off and roll over!).

Then HMRC discover those who are not paying the right amount (because they've been issued the wrong tax code ... or a temporary tax code was never revised) and then they get harassed to cough up.

I myself received a letter saying I owed them £7,000. The Mrs went to pieces (I laughed knowing they were completely wrong) but after a few days of being pushed from pillar to post and transferred here, there and everywhere, I got lucky - I spoke to one person there who knew his job. And he spotted that some box on my tax return was checked but hadn't been spotted. Turns out that they owed ME money!! But others would have just paid it, such is the fear that the blessed Revenue inspires.

Fed up with all this nonsense, I engaged an accountant. Within minutes, she spotted I had been overtaxed for several years and got me a substantial rebate. HMRC didn't see it - they were happy to take the money but had to eat humble pie the moment my accountant wiped the floor with them. And then the clueless f'kwits tried to tax me the next year on the rebate they paid me due to their incompetence. Suffice to say, said accountant kicked their arses again.

Repeat after me...

GET AN ACCOUNTANT!!!

Seriously! As Sir Red of Bladdershire confirmed, the tax system in this country is one of, if not THE most complicated in the world and you should not enter that murky world without suitable armaments. Yes, it will cost you some money but it can pay dividends.

As for finding one, Yellow Pages. Any decent firm will give a free consultation, maybe even advice - take it from there.

But for Joe Ordinary to take on the Revenue is like walking into a war zone naked and armed only with an empty water pistol! Accountants have tanks and Howitzers!!

And before anyone gets all hoity, it's not tax avoidance or tax evasion or immoral - it's paying the correct amount of tax and I'd say you have to be a complete fool to pay more than you have to. For example, would you walk into Greggs and pay £10 for a pasty just because some simpleton behind the counter tells you that's the price even though the pasties are marked as £1? I think not!

FWIW, I wouldn't pay £1 for a Greggs pasty but that's another story!





Now you have scared me !

--------------------
http://www.myspace.com/ianhubball


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hollowsun



Joined: 20/01/05
Posts: 5486
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026753 - 02/01/13 04:35 PM
Quote Marbury:

Now you have scared me !



Good!

Tax needn't be taxing if you are strictly PAYE (*) but it can get awkward if you have something else going on on the side. Not impossible but awkward. And this wouldn't necessarily be a problem if HMRC staff knew what they were doing but the tax system here IS so bloody complicated.

A friend of mine was PAYE but played on the side, helped mates out and stuff, usually cash in hand (no moral judgments please - it was peanuts) but he did a little session once and was paid by cheque (remember those?). Somehow, someone at the Revenue picked up on it and hauled him over the coals - was called in. And this is where it gets stupid...

They accused him of undeclared taxes. "Ok" thought he ... "I'll claim for my guitars and pedals and amps and cables, etc., to offset that"

"Nope - can't be done - it's just a hobby"

"But you're taxing me on that hobby. A friend slipped me £50 for a session"

"Yes - undeclared income"

"But I have undeclared expenses"

"Can't claim on those - it's a hobby"

And so on. It's madness!

My first wife's mother was a trainer for the Revenue, teaching the hapless new employees the rules...

She was on a course every few weeks for HER to learn of new changes in the tax system and SHE couldn't keep up with it. And that was back in the 80s - it's only become more complex now by a massive magnitude.

Which is why I say (and Sir Red confirms) ... get an accountant!

I don't like them any more than the next man and the old joke has some truth...

Two coaches drive over a cliff. One is full of accountants, the other is full of lawyers. Which one hits the ground first?

Who f'k'n cares?!!!

But would you go to court without suitable representation? You MIGHT be able to wing it but the chances are you wouldn't - they could walk all over you.

For all their incompetence, the Revenue have enormous power - you should be well defended ... to the hilt.

Not quite related but related...

Some years ago, Customs & Excise had me in over sums of money paid in on which they claimed that I'd not paid VAT. I was facing a court case and possible imprisonment for VAT fraud. Quite understandably, I soiled myself!

I went through everything with my accountant who figured it out...

Turns out that these payments were VAT refunds I'd had from C&E which, of course, were not liable for VAT. But the stupid bint who was so colossally useless at her job COULD have had me locked up because of her idiotic incompetence! But those payments wouldn't (maybe) have clicked with me on my own, especially in a state of perpetually crapping myself! I redefined the meaning of the word 'panic'! But there are these hopeless incompetents running round wielding so much power in decent peoples' lives every day! Just the same as the £7,000 tax bill I received because someone f'k'd up and they actually owed ME money!

On a brighter note, many years ago, sans accountant, I was hauled over the coals by the Revenue - the full Ken Dodd/Lester Piggott treatment. Scary. But I was damned lucky - clueless but lucky! The tax inspector was an ex-accountant, could see that I wasn't a fraudster, just a useless muso with his head in the clouds and, bless him, he went through my stuff. A day or two later, he called me to say that I'd not claimed for this, that and the other and I was actually due far less tax than anticipated. He got four figures off my bill (and I don't mean £10.25!).

As I say, I was lucky, damned lucky - he was a nice and fair bloke... a bit wally and geeky and stereotypically Monty Python accountant-like but a decent bloke. That was 20 years ago. Wouldn't happen today where the prime factor is meeting targets in an overly-complicated system run by people who don't, for the most part, actually understand it themselves relying on an IT system that - basically - doesn't work.

And it wouldn't have happened at all if I hadn't been a stupid tight arse and had used an accountant rather than trying to do it all myself!

More than ever now, you need to protect yourself.

Get an accountant. If nothing else, arrange a meeting and speak to one.

I am not saying this to be arsey but to help. Christ, you can't go into a shop these days and be guided to the right size of trousers - what hope with the Revenue employing (often) part time staff on (often) a little above the minimum wage and who have been on a three day training course?!

And none of this is to be derogatory about Revenue staff per se because I can imagine how difficult it is for anyone working in those conditions. But it is a bloated, confusing, over-complicated, inefficient and incompetent 'system' so full of loopholes that it's leakier than a badly made sieve. You need the best defence possible.

And if you have your wits about you and (unlike myself in these matters) you are not a complete idiot, there's every chance you can sort your own stuff out pretty much and just have an accountant check it for a nominal fee. Just as 'tax needn't be taxing', having an accountant needn't be expensive - and they COULD save you a bloody fortune!

You might be surprised - amazed even - what a good accountant can do for you and what an asset they can be when dealing with the Revenue...

Because you probably don't stand a chance on your own if there's the slightest whiff of a problem!

(*) And even on simple PAYE, the Revenue can - and do - still cock up on a grand scale

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Marbury
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Joined: 28/08/03
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Re: Expenses for self employed in audio new [Re: Marbury]
      #1026766 - 02/01/13 07:01 PM
I appreciate the time taken in helping me with advice. I will definitely seek an accountant up the road and let her have a look at my current earnings and expenses which to be honest, are not that complex.

Media work

Horticulture contracting (just in the summer months and only one place I go back to every year but claim travel expenses as self employed)

Ebay selling (as a business seller)


Basically 3 businesses that are separate on my online form. I have explained last year that hey are 3 incomes. The horticulture and ebay just fill the gaps for now. My situation isn't complex which is why I haven't been too sure if an accountant is necessary.

Perhaps in my case there are no magic ways to save money that only accountants know about! If you are already claiming a percentage of your household running costs, any capital items and sundry expenses, there is not much scope for paying less tax, but I may find out different when I speak to an accountant.

--------------------
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Edited by Marbury (02/01/13 07:07 PM)


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DC-Choppah



Joined: 20/07/12
Posts: 306
Loc: MD, USA
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026789 - 03/01/13 12:53 AM
Don't forget that a fraction of the capital improvements to you house can be deducted. At least that's how it works in the US.

Get a good bean counter. They pay for themselves.


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hollowsun



Joined: 20/01/05
Posts: 5486
Loc: Cowbridge, South Wales
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026797 - 03/01/13 04:03 AM
Quote Marbury:

I appreciate the time taken in helping me with advice.



Just passing on experience

Quote Marbury:

I will definitely seek an accountant up the road and let her have a look at my current earnings



Good move. That might be all that's required. A bit of advice from her (and maybe a nominal fee) and you'll have a better idea of your situation than asking here.

Quote Marbury:

My situation isn't complex ...



No - but the tax system IS!

As The Bladder points out, you may be taxed differently for your musical, horticultural and eBay activities. Who knows? I don't and I don't suppose anyone here does! For all I know, you might be able to claim 100% for some dahlias ... or nothing at all ... and you could be clobbered for eBay sales ... or maybe they couldn't care less about that! Dunno!

And with respect, a music tech forum is arguably not the best place to ask about tax liability!!

Quote Marbury:

Perhaps in my case there are no magic ways to save money that only accountants know about ... but I may find out different when I speak to an accountant.



Quite.

At the end of the day, she might not be able to help/save much (in which case, maybe a second opinion might be prudent?) but you might be pleasantly surprised.

--------------------
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Marbury
active member


Joined: 28/08/03
Posts: 1703
Loc: Cheshire, UK
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026806 - 03/01/13 08:12 AM
I know tax is off topic for music tech but as it's a business forum I thought many self employed musicians who are making a living might have experience with self assessment etc. I remember reading about the late musician David Bedford justifying to HMRC the fact that music cd's were musical research ;-) I wouldn't try anything like that myself.

I wouldn't touch dahlias as the slugs always trash them ;-) I have failed too many times trying to grow them.

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http://www.myspace.com/ianhubball

Edited by Marbury (03/01/13 08:14 AM)


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shufflebeat



Joined: 09/12/07
Posts: 2970
Loc: Manchester, UK
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026823 - 03/01/13 11:12 AM
Quote Marbury:

Perhaps in my case there are no magic ways to save money that only accountants know about!




There are two ways that spring to mind:

It may be that, like Starbucks and despite your honest efforts you fail to turn a profit, operate at a loss for the good of the community so the people can have good coffee. Next year you suddenly strike lucky and earn properly. This year's loss can be claimed against next year's profit.

El Taxman takes a dilslike to.you because you remind him/her of the mother in law/ex husband. They order an investigation. The fact that you have accounts means you can show you didn't earn sqiillions and should not be taxed as though you had.

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Anagrams can be fnu.


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James PerrettModerator



Joined: 10/09/01
Posts: 10453
Loc: The wilds of Hampshire
Re: Expenses for self employed in audio new [Re: hollowsun]
      #1026830 - 03/01/13 11:27 AM
Quote hollowsun:


On a brighter note, many years ago, sans accountant, I was hauled over the coals by the Revenue - the full Ken Dodd/Lester Piggott treatment. Scary. But I was damned lucky - clueless but lucky! The tax inspector was an ex-accountant, could see that I wasn't a fraudster, just a useless muso with his head in the clouds and, bless him, he went through my stuff. A day or two later, he called me to say that I'd not claimed for this, that and the other and I was actually due far less tax than anticipated. He got four figures off my bill (and I don't mean £10.25!).

As I say, I was lucky, damned lucky - he was a nice and fair bloke... a bit wally and geeky and stereotypically Monty Python accountant-like but a decent bloke. That was 20 years ago. Wouldn't happen today where the prime factor is meeting targets in an overly-complicated system run by people who don't, for the most part, actually understand it themselves relying on an IT system that - basically - doesn't work.




I had a similar experience around 10 years ago when they didn't believe that I was continually making a loss on the studio. While all the letters and documents that accompanied the investigation were full of all the horrors of what would happen if they found something amiss, the guy that came round was actually very helpful and showed me things that I should be claiming for.

James.

--------------------
JRP Music - Audio Mastering and Restoration.
http://www.jrpmusic.net


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The Red Bladder



Joined: 05/06/07
Posts: 2318
Loc: . ...
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026831 - 03/01/13 11:30 AM
Quote Marbury:

Perhaps in my case there are no magic ways to save money that only accountants know about!




For starters, you can pay yourself a nominal wage and therefore pay no income tax, but still be building up pension contributions. If you are VAT registered, you can claim back the VAT on such things as £250,000 studio buildings and £50,000 pianos.

The whole field is so complex and is one that I just do not understand properly. We have a book-keeper and she hands the books on to the accountant once a year and I get to sign all sorts of masses of paperwork. I just do my best to understand it all, but we are active in four different countries and that means four different accountants and four different sets of silly rules for me to not understand. The UK one is the most complex, even worse than the US and they have Federal and state taxes, just to make things difficult.

Germany is nice and easy, as they have a set tax code (rather like the UK Highway Code, but far more complex) and means the accountancy fees are about one quarter of the UK fees.

If you are a sole trader in the UK, you should however, be paying very little, a couple of hundred, or thereabouts.


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Marbury
active member


Joined: 28/08/03
Posts: 1703
Loc: Cheshire, UK
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026834 - 03/01/13 11:41 AM
I have all my bank details, Paypal details in a file. I draw an amount from my business account every month into my current account. Basically paying myself. I don't think in terms of profit and loss, just a wage coming in. Of course I am earning more every month than I am paying out so I must be doing something right but by no means am I well off. All I know is I prefer to be self employed, getting paid for what I love doing instead of being in a dead end job working with some difficult people which I put up with for years. My PRS royalties are slowly getting better by the year as are sales from audio. The more I produce the more income I suppose. It's all about numbers. I think of the PRS as being an extra pension for the future.

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http://www.myspace.com/ianhubball

Edited by Marbury (03/01/13 11:42 AM)


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hollowsun



Joined: 20/01/05
Posts: 5486
Loc: Cowbridge, South Wales
Re: Expenses for self employed in audio new [Re: Marbury]
      #1026844 - 03/01/13 12:26 PM
Quote Marbury:

Of course I am earning more every month than I am paying out so I must be doing something right



An accountant might argue that you're doing something wrong!

--------------------
Website / Music Lab Machines / Blog


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C-Dogg



Joined: 01/08/09
Posts: 12
Re: Expenses for self employed in audio new [Re: Marbury]
      #1028770 - 15/01/13 05:28 PM
'I spend say £400 on a new piece of gear for my studio. In the expenses section in the self assessment I key in £400. The calculation automatically deducts this from my taxable earnings. So if I have earned £12,400, the taxman calculates I have earned £12000 for the year.'

Isn't that 'capital expenditure' rather than an expense? The postage costs to get that gear to you, that's an expense, the gear itself has and holds value...therefore capital expenditure, to be added to your 'pool' of assets which you can claim a percentage of each year as they depreciate.

That's my understanding of it anyway. Some very interesting advice on this thread. I'll keep reading with interest (taxable at source)


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Chris L
new member


Joined: 07/11/03
Posts: 323
Re: Expenses for self employed in audio new [Re: Marbury]
      #1034744 - 22/02/13 08:00 PM
Music equipment (such as rack gear, software packages, plugins, instruments etc.) tends to be Capital Expenditure, whereas consumables such as CDRs and guitar strings etc. are Expenses.

I think it used to be the case that you had to keep note of a pool of CE, only able to claim 18% allowance each year of this pool that you'd spent on gear. But more recently (since 2008?) the 'AIA' (Annual Investment Allowance) means you can claim 100% of plant equipment -- i.e. gear purchases for the S.E. muso -- as Capital Expenditure, up to a certain maximum amount (and over this will still be subject to the 18% 'depreciation pool' method as before).

Currently this amount stands at 25k (well, for last year anyway -- from Jan this year it goes up to a whopping 250k, in 2011 it was 100k), so you should be able to offset 100% of your gear purchases within the year against your taxable profits. Obviously, if you sell the gear, that will be taxable income.

I think this figure cap tends to shift about due to the needs of business growth, which makes sense -- it is an investment allowance after all. Without such a guideline in place, it'd be difficult to justify the purchase of extra equipment (for me anyway -- I might prefer to be able to go on holiday instead!).

But yeah, these things seem to change constantly, so it would still be worth checking with a decent accountant before you splurge all your hard-earned on some high-end outboard, only to find out you need to liquidate it for the taxman.

--------------------
ochremusic.com


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un_quantized
member


Joined: 09/07/03
Posts: 305
Re: Expenses for self employed in audio new [Re: Chris L]
      #1035011 - 24/02/13 06:00 PM
Quote Chris L:

Music equipment (such as rack gear, software packages, plugins, instruments etc.) tends to be Capital Expenditure, whereas consumables such as CDRs and guitar strings etc. are Expenses.





My accountant treats software purchases as expenses, which is handy. I don't know if this is correct but she is very confident about it when I ask if she's sure.

--------------------
musics


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