Blog Archives

Does your art create a second income?

28/1/2019

Do you make a second income from your art?

As well as knowing what you can claim against tax, it's important to know what you need to declare.

Even if your art sales are a second income, by trying to sell only for cash and to not declare anything, it can backfire on you in the long run.
a comment on a previous site I ran

Do you know that Her Majesty's Revenue & Customs (HMRC) in the UK are trying to recover more tax from those with second incomes?

Other tax authorities in other countries are also trying to do the same thing.

In particular, they're very interested in "the black economy" - i.e. those that don't declare that income for tax purposes (a.k.a. tax evasion)

business activity and income that people do not record in order to avoid paying tax on it

business activity that is illegal because tax on profits is not paid to the government

Definitions of the 'black economy' | Cambridge Dictionary

There are lots of websites highlighting how you can use your talents and skills to make a second income.

However very few tell you about the tax implications of a second income.

Bottom line - if you get found out, the result can be very significant punitive fines and possibly a criminal record..

On the other hand, some tax authorities realise that the right tax might not get paid at the right time by the people who need to - because not everybody understands the system. They want to make it possible for people with unpaid tax to remedy mistakes before the taxman contacts you.

AN EXAMPLE OF CONFUSION

Some people believe that it's possible to earn a certain amount of additional income before you need to declare it for tax purposes.
BUT:

They assume that their annual personal tax allowance is equivalent to permission NOT to declare earned income up to that sum (e.g. see Tax charges on a second income)
They do not know that an individual's personal allowance is built in to the tax code/rate used by your employer to tax your main source of income - and is not available to offset second incomes.
They are unaware that all second income attracts the highest rate of tax used for your total income.

A second income from your art

Lots of non-professional artists make a second income from their art from their art. Not so many remember to check out what that means for how they need to pay tax on that income.

This post provides a summary of

some of the things you need to know about taxation on second incomes (but it is NOT professional/legal advice and I owe you no liability in respect of what is set out below.)
what you must do to declare any unreported tax liabilities (in the UK)

make sure you declare everything you should add - and do your sums correctly

What is a second income?

The type of activities that tend to generate a second income - in general - as described by HMRC are set out below.

I've also included some hypothetical EXAMPLES of what such activities might be identified and categorised for artists

fees from consultancy or other 'expert' services such as public speaking or providing training - EXAMPLE: lectures to art schools, art classes at home (or elsewhere; individual personal tuition delivered to various students)
payment for organising parties and events or providing entertainment (EXAMPLE: organising painting parties / painting holidays for people who are not close friends)
income from activities such as taxi driving, hairdressing, providing fitness training or landscape gardening (EXAMPLE: painting commissions to order)
profits from spare time activities such as making and selling craft items (EXAMPLE: selling artwork online.)
profits from buying and selling goods, for example regular market stalls, boot sales etc (EXAMPLE: selling art or crafts on a regular basis at various local / regional art fair or market)

To get clarification of how HMRC will treat you, it's a good idea to reference two other posts

Income Tax: The nine badges of trade (January 2017) - what specific tests HMRC use to differentiate between artists who are trading and hobby artists who make a little bit of hobby income
The bonus if you're selling art - but not a lot! (April 2018) - about the hobby income allowance - which allows hobby artists to can earn small sums and not pay tax (so long as they keep proper records). The tax free allowance is also available to those earning more than £1,000 - so long as they don't reduce their tax bill by claiming expenses and offsetting these against their turnover.

If your annual gross trading or property income, from one or more trades or businesses is more than £1,000 you can use the tax-free allowances, instead of deducting any expenses or other allowances.

HMRC and second incomes

It does not matter why your tax affairs are wrong, it’s better to come to HMRC and admit any failures or inaccuracies rather than wait until we contact you
How to make a voluntary disclosure to the HMRC (updated January 19th 2019)

In 2014, the HMRC ran a campaign relating to second incomes which took the approach that most people want to pay the right tax - but sometimes they just find the whole process rather confusing. It offered people the opportunity to disclose their situation in relation to any unpaid tax. The campaign finished in 2017.

Now that campaign has come to an end, the approach continues to be supportive rather than punitive in the first instance - but ONLY for those who make a formal disclosure.

0 Comments

Just over a week left to complete your UK self-assessment tax return

23/1/2019

0 Comments

By way of a reminder to anybody who has still not done their UK self-assessment self-employment tax return!

HMRC sent me a reminder about my tax return today (for some reason I have become severely detached from the dates on the calendar in January!)

This year HMRC has for the first time actually recognised there are people like me i.e.

retired, with a pension,
generating an income and
needing to complete the self-employment part of the tax return.
needing to make a payment to HMRC once the tax return is submitted.

It appears they've become more attuned to the information needs of those people with pensions who also complete a self-assessment return - and some of the ways in which they've not been very good at recognising this in the past.

Tax Tips for Artists

You can read my compendium of Tax Tips for Artists and UK: Tax Tips for Artists based on:

my experience
advice from government and official sources - including links to official documents
expert comment by professional advisers

PLUS some of the very latest YouTube videos BY HMRC to help people to:

register as sole traders,
process their financial data properly for tax purposes (e.g. what you can claim and what you can't claim and simplified ways of doing this)
complete their self-assessment returns
complete their tax payment due at the end of January

NEW - in 2017/18!
Hobby Income Tax Allowance (UK) for artists without a business

For hobby artists, don't forget there's a new change just for you in 2017/18.

If you make more than £1,000 in income from your art (or other trading activities) you MUST complete a self-assessment tax return. If you make less, they let you off the hook - but you must still keep proper records! See the note at the end for how this works.

Tax-free allowances on property and trading income | GOV.UK -

This measure introduces 2 new annual tax allowances for individuals of £1,000 each, one for trading and one for property income
These new allowances take effect as from the tax year 2017 to 2018.
If your annual gross trading OR property income is £1,000 or less and you’re not registered for Self Assessment, you won’t have to declare this income on a tax return.
However you must keep a proper record of this income.

Help from HMRC and YouTube

HMRC has a LOT of very accessible online support designed to help you complete your 2017/18 tax return.

Besides guides which you can download in pdf format, there are a LOT of very useful videos online. For example:

Self assessment help and deadlines playlist has 18 videos
Help for the Self-employed playlist has 14 videos

0 Comments

Legal Matters for Artists - ignorance is no defence

21/1/2019

2 Comments

"Ignorance is no defence" is a very basic legal principle and an age old 'law'.

It basically means that you cannot use your ignorance of the law as an excuse for why you ignored it or flouted it. It also prevents people from avoiding prosecution for things they have done wrong.

As an artist you can neither ignore the law nor try to excuse things you have done by saying you didn't know.

If you go into business, it's a basic principle that you must find out all the things you "need to know" to conduct your business affairs properly,

Legal matters for artists

Legal and business considerations exists from the moment an artist conceives a work
Tad Crawford

I'm no lawyer - and therefore not an expert. However I do know enough to be periodically horrified when I realise the ignorance of some artists about the law that relates to their various activities.

Ignorance may be bliss - but it is very definitely no defence and some artists leave themselves open to various liabilities as a result!

I've created a NEW page, called Legal Matters for Artists, which provides a brief summary of matters which can have legal consequences for artists and what you "need to know" about. You can find it

in the Office Practices section
of the PRACTICE Section
of my website Art Business Info for Artists

In essence it's a combination of a checklist of legal issues relevant to artists PLUS a compendium of other legal resources

It's also relevant to those arts and artists' organisations which conduct activities covered by law relating to art business.

Headline matters

Various laws are relevant to artists - but do you know what these are?

The "headlines" of legal matters cover the following. Under each heading I highlight and suggest the type of issues you may well "need to know" about or be aware of.

Artists Rights
Art Sales - Auctions, Galleries and Dealers
Artist Contracts with Galleries and Dealers
Online Sales: art / commissions / tuition
Art Sales / Tuition: At Home / Open Studios
Art Insurance and Safeguarding
Moving and Shipping Art - including over international borders
Money and Art - and Tax
Art Estates and Legacies
Personal data collection and data protection

Each of these provides links to other pages on my website which provide some of the answers - or links to places which can.

Pages are in development for the following sections - although legal issues which need to be considered are highlighted on the Legal Matters page.

Art Competitions and Open Exhibitions
Patrons and Commissions
Artist as Author / Publisher
Artist as employer / employee.

Subscribe to Art Business Info. for Artists - NEWS by Email
and receive every post via email.
(Your subscription is only activated after you verify the link in the email you will receive)

Learning more about art

It also contains links to:

various sources of expertise and commentary on art law
various articles and online sites providing information about art law
a book about art law
lawyers specialising in art - including pro bono and fixed price lawyers
courses providing professional development for museum and gallery professionals
tuition in law relevant to art - including a Distance Learning Diploma in Art Law

If anybody can think of anything I've omitted please leave a comment below or contact me

DISCLAIMER: I am NOT a lawyer. Nor do I provide professional advice on legal matters. If you need legal advice you need to consult a professionally qualified lawyer. Given the size and scope of this site I also do NOT warrant that:

any information is complete and/or professional
all links lead to the most current and up to date information.

2 Comments

Did you know that when Google likes you they do this?

4/1/2019

0 Comments

Sitelinks - and what people look at on your website

Sitelinks gives you a more prominent profile on Google.
Sitelinks also suggest your website is a trusted site.
They also mean you're attracting enough traffic to warrant highlighting your website - because you simply do not get any sitselinks until your website has been around for a bit, attracted a decent amount of traffic and gets updated regularly.

The links shown below some of Google's search results, called sitelinks, are meant to help users navigate your site. Our systems analyze the link structure of your site to find shortcuts that will save users time and allow them to quickly find the information they're looking for. Google Support - Sitelinks

The thing is you cannot determine which links get listed in Sitelinks. It's all totally animated and driven by an algorithm and the probability is that relates to traffic (this is Google after all!). That also means that if you cover topics which don't drive a lot of traffic that that topic will never get a site link - even if you are the #1 source on Google for that topic!

On the other hand, it's actually very interesting for me (and you) to know what other people want to know about in terms of search queries. I happen to know (for other reasons) that yesterday my website got a lot of hits for "selling art from home" and guess what's in the sitselinks for today! (see above!)

Google also gives you some tips - and I'll be making sure that I use these in future - including asking Weebly how come anchor text has still not made it into the feature list!

There are best practices you can follow, however, to improve the quality of your sitelinks. For example, for your site's internal links, make sure you use anchor text and alt text that's informative, compact, and avoids repetition.

REFERENCE:

Sitelinks | Google Support
Sitelinks | Wikipedia
Google Sitelinks: The Ultimate FAQ | Cristian Mezei (March 3, 2008),

Why you can't find an art business on Google

HOWEVER First you have to get your website to register with Google - which means you need to tell Google about it.

Google tells you some of the simple reasons why your art business might not be registering on Google eg

Your business isn't verified.
Your business appears on Google Maps, but doesn’t always appear in search results.
You recently added or edited your business information.
Your business information doesn’t comply with our guidelines.

Check out the explanations of what what do in

Can't find business on Google
Add a business before it opens for those not yet online....

Subscribe to Art Business Info. for Artists - NEWS by Email
and receive every post via email.
(Your subscription is only activated after you verify the link in the email you will receive)

Knowledge Panel/Graph

Of course you've really made it with Google when you have a location based business and Google decided you need a knowledge panel. Or so you might think.

However you'd be wrong as Google's Knowledge Graph functionality tends to pick up the information from public information sources such as Wikipedia in order to create a Knowledge Panel!

So this is one for the famous artists, art galleries and art studios - but not for their websites!

Google's new Activity Card

Google turned 20 in 2018 and came up with a new trick for presenting search results.

It's called the Activity Card and this Trusted Reviews article (below) explains how it works - and why it's been designed - with the images indicating that it's very much oriented to fast search using a smartphone.

READ Google presents ‘Evolution of Search’ with Lens, Activity Cards, Collections and Discover

Writing all of this has made me think I really need to write up all the techie bits for Websites for Artists which haven't made it on to the website yet! That will join the "to do" list for 2019!

0 Comments

Art Business Info: NEWS

Does your art create a second income?

A second income from your art

What is a second income?

HMRC and second incomes

Just over a week left to complete your UK self-assessment tax return

Tax Tips for Artists

NEW - in 2017/18!
Hobby Income Tax Allowance (UK) for artists without a business

Help from HMRC and YouTube

Legal Matters for Artists - ignorance is no defence

Legal matters for artists

Headline matters

Learning more about art

Did you know that when Google likes you they do this?

Sitelinks - and what people look at on your website

Why you can't find an art business on Google

Knowledge Panel/Graph

Google's new Activity Card

Art Business Info. News for Artists

Visitors so far

GET Art Business Info. NEWS by Email

Author

Archives

Categories

Art Business Info: NEWS

Does your art create a second income?

A second income from your art​

What is a second income?​

​HMRC and second incomes​

Just over a week left to complete your UK self-assessment tax return

Tax Tips for Artists​

NEW - in 2017/18!​Hobby Income Tax Allowance (UK) for artists without a business​

Help from HMRC and YouTube​

Legal Matters for Artists - ignorance is no defence

Legal matters for artists​

Headline matters

Learning more about art

Did you know that when Google likes you they do this?

Sitelinks - and what people look at on your website

Why you can't find an art business on Google​

Knowledge Panel/Graph​

Google's new Activity Card​

Art Business Info. News for Artists

Visitors so far

GET Art Business Info. NEWS by Email

Author

Archives

Categories

A second income from your art

What is a second income?

HMRC and second incomes

Tax Tips for Artists

NEW - in 2017/18!
Hobby Income Tax Allowance (UK) for artists without a business

Help from HMRC and YouTube

Legal matters for artists

Why you can't find an art business on Google

Knowledge Panel/Graph

Google's new Activity Card