I got an email this morning asking questions about the tax aspects of setting up an online art gallery and ecommerce which involved artists and paying customers who might be located anywhere in the world
Below you can read:
What are the tax implications of selling art online?
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Authors and artists who have fluctuating profits may pay a large amount of tax in a good year and little or no tax in a bad year. A relief, introduced in the March 2001 Budget, allows such people to average their profits for successive tax years. This can reduce their total tax bill for the 2 years concerned. The relief replaces previous reliefs for spreading of royalties and sums received for the sale of works of art. The same sort of people will benefit but this relief is simpler and more people will be able to claim.
Averaging will only help you if the top rate of tax that you pay is different for each of the 2 years. For example, averaging:
- will not help you if you pay higher rate tax (40%) each year
- may help you if you pay tax at the basic rate one year and higher rate the next
- may help you if you are liable to tax one year but your income falls so you are not liable the next
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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