Art Business Info: NEWS
about art for artists
In the UK Income tax is charged on “the profits of a trade, profession or vocation”.
You are assessed as trading and therefore must do a tax return if you exhibit one of the nine badges of trade. But do you know what these are? See the box below for an explanation.
First you need to note that a lot of tax law focuses on "the asset”. However there isn’t a lot of tax case law relating to artists - so what follows is my interpretation.
Please note that I’m NOT a tax accountant and if you need professional advice you should pay a professional!
For what it's worth, in the case of an artist I read “ the asset” as meaning either your stock of equipment and materials used to generate sales (which has a balance sheet value); or your stock of artwork (which has a balance sheet value) which is exhibited and sold over time via exhibitions, online, art fairs or wherever to generate an income.
The nine badges of 'trade'
One of the reasons why HMRC wants to know whether or not you are trading is because it needs to know what sort of tax to apply to your income.
For example, money you receive can be a taxable receipt that can arise in a number of ways. These are:
Below are the Nine Badges of Trade which HMRC have declared to be indications of trade - and my interpretation of how these apply to artists.
Please also remember that at the end of the day what matters is if you generated trading income or intended to trade - NOT how much profit you've made.
You’ll also get the chance to ask specific questions in the webinar and you don’t need a webcam or microphone to use this service.
My guess is the webinars are probably also suitable for more experienced people who want to check out they're doing the right thing! Or maybe just a refresher to remind you of anything you might have forgotten!
Record keeping for the self-employed - 27 September 2016 15:00 to 16:00
How to set up a record keeping system and what to record.
Find out about
Business expenses for the self-employed - 29 September 2016 11:00 to 12:00
This webinar covers
Capital Allowances for the self-employed - 30 September 2016 9:00 to 10:00
You can also follow the HMRC Twitter feed for HMRC Business Help @HMRCbusiness
My article in the September edition of The Artist magazine (in the UK) is all about how to Be business-like with expenses and tax.
It contains lots of brief tips about how to make your tax affairs easier to manage and avoid problems with the Inland Revenue. Headings include:
The tips are all one side of A4 making them very easy to file!
This edition is still on sale in all good newsagents in the UK but is also available as a back issue and is also available online as a digital subscription.
Reader's question #1: Are taxes the same for all income - and what about travel expenses?
Two questions from a reader:
Are taxes the same for all different sources of income?
In the UK, the answer is ALL INCOME is liable to tax assessment - no matter how you earn it.
In fact, my P60 (for my pension) has a neat quote in it which I've added into the HMRC section of Tax Tips for Artists.
By law you are required to tell HM Revenue & Customs about any income that is not fully taxed, even if you are not sent a tax return.
Can I deduct my travel expenses from my income before tax?
Whether you can claim travel expenses depends on how you earn your income
You may not be aware but many artists do NOT just earn income from sales of their paintings.
Very many professional artists who also teach earn income:
The issue of whether or not you can claim travel expenses relates to whether or not you are a sole trader and wholly responsible for all your actions.
So for example, (in the UK) if you are an employee with a contract of employment and what you do is dictated by others (eg you teach a set curriculum); you are managed and assessed as to competence by others and paid on a monthly basis - then you can't claim home to work travel expenses.
That's because you are the same as every other employee in the UK - and employees can't claim home to work (and back again) expenses as a business expense.
However if you are completely freelance and have a number of different people who hire you to teach art and/or you deliver your own workshops at different venues you hire around the country - then you are self-employed and you can then claim your travel expenses.
Basic principles: you can only claim travel expenses:
Note: This article is intended to be for general information and is should not be relied on as definitive tax advice. It's your responsibility to check the rules for the country where you live and work and the relevant tax year. The tax rules may be similar or they may be different.
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Katherine Tyrrell writes about art, artists and the art business and has followers all over the world. She also delivers workshops for art organisations and reviews websites and career strategies for artists.
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