Tax Return help for professional Actors
How do I register? What expenses am I allowed to claim? Is it difficult completing a tax return online? How much tax will I have to pay?
These are important questions that need to be answered if you want to avoid problems with the tax office. This guide sets out the basics for getting your tax affairs in order and completing your self-assessment tax return.
Tax penalties were increased last year, so filing your tax return promptly and getting it right first time is more important than ever. After all, in these difficult times, everyone should be aiming to avoid wasting their hard-earned cash on hefty penalties.
TAX RETURN GUIDE FOR ACTORS
Registering with HM Revenue & Customs
Selecting the right form
If you believe you need to complete a tax return, you must inform HM Revenue & Customs (HMRC). There are mainly two forms to use; selecting the right one will depend on your reasons for needing a return:
If you’re newly self-employed, click on the link below to HMRC website.
For any other reason, such as you have become a Buy to Let Landlord, you’re likely to need form SA1
Most HMRC registrations can now be done online on their website.
The information required in these forms is fairly straightforward, such as full name, date of birth and address. You will also need your National Insurance number.
If you’re registering as self-employed, you will also need to provide details about your self- employment, such as when you started, your address, the nature of your work, etc.
If you’re completing the registration process using paper forms, the address that you need to send them to once complete can be found on the form. You should always keep a copy of the form and note the date that you sent it.
HMRC will send you a confirmation of registration and provide you with your unique taxpayer’s reference, or UTR. This is a unique reference for your tax affairs. You should quote this on any payments you make or any correspondence to HMRC. They will also ask you for this or your National Insurance number if you ever phone them with a query.
The basics of the tax return
A tax return should disclose your taxable income and gains for the relevant tax year. A tax year starts on 6 April and ends on the following 5 April. Also note that all of your taxable income and gains must be declared on a tax return – even if they have been taxed before you received them ( or ‘taxed at source’), such as employment income or bank interest.
Submitting the tax return
Following the end of the tax year, tax returns must be submitted to HMRC. You can submit your return on paper; this must be done by 31 October following the end of the tax year. Alternatively, you may chose to file your return online, in which case the deadline is extended to the 31 January, following the end of the tax year.
Failing to file your return on time will result in an automatic £100 fine, with further penalties depending on the length of delay. Last year, the penalty rules changed. Previously, if the tax you had to pay on 31 January was less than £100, then your penalty would be reduced to whatever was owed. But this has been scrapped and the £100 penalty is now fixed and automatic.
Paying any tax due
Any tax you owe must be paid by or on the 31 January following the end of the tax year. There are a number of ways you can pay HMRC, such as Direct Debit, Bank Giro, online banking etc.
As mentioned above, income that has already been taxed must still be declared on your tax return. However, the tax already paid at source will be deducted before arriving at the final tax bill.
Be aware that if your tax liability is over £1,000 or not much of your tax is collected at source, you may be required to make an instalment for next year’s tax as well on 31 January. Again, delaying paying HMRC could cost you interest and late payment penalties.
You should keep your records and documents for six years in case HMRC want to examine them in the future.
HMRC is not very precise about the format of records a business should keep. They are indifferent as to whether you should use a manual cashbook or sophisticated bookkeeping programme. Many of our clients simply add up their receipts and enter their transactions directly on to our online forms which are used by us to complete their tax returns, some upload their spreadsheets to their own client login on our website.
When starting out, you may want to begin with simple spreadsheets, a basic book to record your income and expenses or a cashbook and very quickly you should be able to identify what format your business needs its records in.
Other sources of income
If you have other sources of income, these are the sort of items you need to keep:
• Bank interest certificates
• Dividend vouchers
• Portfolio statements
• P45s/ P60s from pension providers or employers
• P9Ds/ P11Ds from employers
• Notifications regarding any state aid such as the State Pension or Job Seeker’s Allowance
• Paperwork regarding pension schemes being paid into
• Receipts for donations made under the Gift Aid scheme
• Paperwork for any assets you have sold, such as shares, land etc.
• Income and expense receipts for any land or property you received income from- in the UK or overseas
Again, this list is not exhaustive, but hopefully it gives you a good idea of the type of paperwork it is necessary for you to keep and which will be required for the completion of your tax return.
Claiming business expenses
Below is a comprehensive list of the most common expenses professional Actors can claim.
Business cards and flyers.
Agent’s commission and complimentary tickets.
Competition entry fees.
Bulbs, fuses, locks, keys, plugs, leads and minor repairs.
Computer consumables including USB memory sticks, external hard drives (back up) and software annual license fee.
Coaching and rehearsals for engagements in hand.
Dental work beyond normal needs of health.
Deputies and accompanists (exclude deputies for an employment).
Dress wear Hire of professional dress wear.
Laundering and dry cleaning of professional dress wear.
Replacement cost of professional dress wear.
Specific gig dress wear (at the behest of TV/ stage producer)
Hire Rehearsal studio or performance venue.
Hotel accommodation on tour.
Instruments Insurance including part or contents policy, if appropriate.
Journals and catalogues.
Throat spray and lozenges.
Treatment for specific business purpose (no dual purpose) including osteopathy, physiotherapy.
Porterage, carriage, removals
Private pupil’s exam fees and prizes.
Recording equipment. Batteries for radio/ cassette recorder/ calculator.
Blank tapes/ CDs/ DVD for rehearsal. Demo discs/ tapes including cost of engineer to record them. Memory cards. Style and maintenance. Records/ tapes/ CDs/ DVDs not retained for more than two years.
Replace tour luggage and toiletries.
Research assistance and material.
Royalties to PRS.
Software for your computer, web domain, registration and hosting fees.
Stage appearance. Contact lenses and spectacles, maintenance insurance thereof (you must have second set of lenses or spectacles that you use outside work).
Fitness costs if relate specifically to role. Hairdressing, cosmetics, beautician. Make up and remover.
Stationery and printing
Subscriptions to professional bodies.
Subsistence – you are allowed to claim the cost of all your meals when on overseas engagements. Only claim the cost of the evening meal when on tour in the UK and day time meals incurred on business travel.
Television – if much of your work is on stage:- License fee, Rental and Repair.
Telephone:- Land line – calculate business use.
Mobile – business use
Tips including tips to dressers, call boys, stage doorkeepers.
Bicycle repairs and maintenance, consumables and insurance.
Fares to the engager.
Fares to other than engager, e.g. music shops, libraries, auditions, festivals. Inoculations.
Travel cancellation fees. Travel insurance. Visas.
Visits to cinemas, concerts, opera, theatre, but only the cost of the ticket and only if akin to your repertoire.
Wardrobe expenses – replacement and renewal of existing items (including shoes and towels) and props.
Motoring expenses (include motor cycle and or car) keep a log of the total and business mileage for each vehicle so that the business element can be calculated:-
Breakdown subscription & insurance.
Car hire, petrol allowance to colleague(s).
Car repairs, servicing, MOT, oils, antifreeze.
Parking at engagements, tolls and ferries.
Road fund license.
Please note: If you use your vehicle for your own personal use then you need to factor this in when any expenses are claimed. For example if you calculate that you use your vehicle 20% of the time for personal or family use, then you would need to reduce any relevant vehicle running expenses by 20%.
An alternative to claiming the vehicle running costs is the HMRC’s Fixed Scale Mileage Rate which is currently 45p per mile for the first 10,000 and 25p thereafter. This includes a depreciation allowance (capital allowance) for the vehicle but does not include interest on any loan to purchases the vehicle. This can be claimed in addition to the mileage allowance.
A claim for capital allowances can be made for assets used for your work. This can be up to 100% of the purchase cost.
Remember that when you commence your business that you can claim capital allowances on the “Fixed Assets” which you have introduced to the business even if you purchased an item several years before you commenced your business.
Common assets which you can claim a capital allowance
Angle poise lamp, dedicated lighting.
Books including music reference books.
Camera, projector, screen.
Computer and printer.
Instrument and associated equipment.
Motor vehicle including car and van.
Office furnishings including carpets and curtains.
Office furniture including desk, chair, filing cabinet and bookcase.
Piano stool/ seating for playing instrument.
Plant and machinery (equipment).
DVD, VCR, cassette recorder, hi-fi and music centre.
Records, CDs/ DVDs and recorded tapes.
Scores and enduring music (lasts over two years).
Telephone including mobile phone.
NOTES ON EXPENSES
Use of home
If you work from home, you will be able to put through a portion of the running costs of your home. It could include household bills such as gas, electricity, telephone, broadband, rent, council tax, mortgage interest, insurance, etc.
Effective structuring of the ownership of vehicles can lead to significant tax savings. Furthermore, you should consider the type of vehicle you’re buying because they have different tax treatments for capital allowances.
There are harsh rules about what training costs can be offset for tax purposes if they are for the proprietor. Unfortunately the initial training fees to become a qualified Driving Instructor are not allowable.
If you transfer a personal, pre-owned asset to the business, you may be able to obtain tax relief for it.
Family wages has long been an area of abuse by individuals, so the rules regarding wages paid to family members have tightened. You may still pay family members wages, but they must actually be doing some work for the business and their wages be physically paid – ie HMRC will want to see a bank payment or receipt of cash paid to them. Furthermore, you should still consider national minimum wage rules, young workers regulations, and tax and national insurance implications etc.
Business entertainment and gifts
It must firstly be stressed, that there is a raft of rules regarding entertainment and gifts. But generally speaking, if you are entertaining anyone other than staff, the expense will not be allowable for tax purposes.
Starting out in business and completing your first tax return can be pretty daunting. As you can see, from registration with HMRC through to completing your tax return can be a lengthy and complex area.
A tax advisor or accountant could deal with all of this process for you, and although you do not need either of these to deal with your own affairs, there can be real benefits in using a professional.
Firstly, a professional should ensure that you comply with legislation and HMRC guidance. Cutting corners can save you money in the short-term, but could be costly in the long-term if you were to incur penalties for one reason or another.
Furthermore, a good tax professional should be able to save you tax. They may review your affairs, and identify areas in which changes can be made in order for your affairs to become more tax efficient.
KWA tax returns online – Our service
The thought of having to complete a Tax Return can be quite a daunting task as well as time consuming. For just £130 (after tax relief £104) we can prepare and file your Tax Return for you without any fuss. Simply provide us with the information we ask for then leave the rest to us.
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayers’ circumstances do vary and if you feel that the information provided is beneficial it is important that you seek professional advice before implementing.. If you take, or do not take action as a result of reading this article, we will accept no responsibility for any financial loss incurred.