Expenses for the creative arts
I am a self-employed professional in the creative industry. What are my claimable expenses?
Everyday we have clients who come to us confused about their expenses. For self-employed professionals in the creative industry, the topic of expenses is often one that is dreaded and extremely complex.
The rule-filled world of accounting and HMRC seems to naturally conflict with most creative professional’s temperament. Consequently, many performers avoid the area completely and are left with nothing but panic in the run up to the tax return deadline (31st January 2017).
When you commit to being a self-employed actor, musician, photographer, stage decorator or any professional in the creative industry, you are also committing to keeping proper accounting records. The records are then analysed to make up your tax return. These documents must be fit for HMRC inspection at all times- therefore always kept up to date.
The law states that expenses are only claimable when ‘wholly and exclusively incurred in the performance of the business.’ However, the reality of claiming expenses can be a lot more intricate than it first appears.
Many creative professional jobs, such as a career in photography, involve costumes and props. Claimable clothing/materials would be regarded as items that you have purchased solely for your profession. These must be used for the production that you are working in and must be paid for by you. As a result, the expense is not claimable if the production pays for your costume or props.
Any equipment that you have had to purchase due to your sole trade can qualify as a capital allowance. This is only eligible to creative professionals who have no other trade and only accounts for material that is £100 and above. This means that if you are a photographer looking to claim the expenses of a £16.00 USB drive it would not be liable to be claimed upon under ‘Equipment,’- but would be deductible under expenses for ‘Office Costs.’
Office Costs are tax deductible for self-employed professionals. This is limited to costs such as stationary and postage that are necessary for your job role.
Another area key to all jobs within the creative industry: staying on top of the latest news and inventions in your field- as well as growing your knowledge. Therefore, costs incurred through research that contributes to your job role are claimable. For a self-employed actor: this claimable expense may be going to the cinema or buying a book. If you can clearly show how the act furthers your ability to do your job, it can be claimed upon.
Charges that involve training for your job role are also deductible. As long as the training is for a skill that you already possess and helps you improve that skill for your self-employed job. As a result of this legislation, a photographer who is only experienced in still-life shots could not claim a training course in video images on their tax return.
If you’re job requires you to look a certain way, procedure costs required to meet this criteria can also be claimable. For example dental, gym, health and beauty costs are claimable- but must be apportioned due to their dual-purpose nature. Therefore, if you are an actor with a role that requires you to maintain/gain a certain shape or muscle build, gym fees are a claimable expense. Due to the partially personal nature of this expense it is only 50%-tax-deductible.
If you’re stage manager who is working on a job far away from home that requires both temporary accommodation and travel, you can claim both accommodation and travel expenses incurred directly from the job. This applies to all professionals working in the creative industry. As long as the temporary accommodation is far away from your home address and the travel is solely job-related it can be claimed upon. Speaking in terms of travel cards: only part can be regarded as tax deductible due to the part-personal nature that can be found linked to its use.
On work-related trips over 5 miles from your home address you may incur costs due to subsistence. These expenses are claimable as long as the cost is due to your self-employed role and you are unable to make any food.
Maybe you’re a creative professional facing extra expenses as a result working within your home? You can claim part of our home expenses, providing that you use an area of your home for self-employment purposes. These purposes can include rehearsing and looking for acting jobs. This expense must be apportioned, as your home expenses would be regarded as at least semi-personal.
A final example of an expense that is claimable as a self-employed professional in the creative industry is the resulting costs of mobile and home phone usage. If you use your phone for self-employment purposes, your mobile phone bill can be apportioned on your tax return.
Of course, there are a number more situations where you are eligible to claim upon expenses that you incur during your self-employed day. To seek more advice on your tax return as a self-employed professional in the creative industry contact Bambridge Accountants, a specialist in accounting for creative industry professionals. Accountancy fees surrounding your self-employment are also deductible.