As a musician, you might not be aware of the items you can claim on business expenses. Luckily, if you choose to use me as your accountant, you won’t need to remember any of the below (but I’m always here to help in the meantime).
Within the music industry, there’s a lot of items you can claim as business expenses, but there’s also a few that fall into the category of duality, so they’re not just used for business purposes – or, as the Tax Acts states ‘wholly and exclusively for the purpose of trade’. Does that sound like music to your ears? Let’s go through some of the main expenses you might claim as a self-employed musician.
Whatever you play, if it’s what helps you bring in your income, you’re going to want to protect and look after it. Maintenance and repair costs on your instruments can be claimed back – as well as insurance for those instruments. You might also buy new instruments along the way, or equipment, such as microphones and leads or cables – all of these items can be deducted. You can claim something called ‘capital allowances’ when you purchase items for your business, such as instruments – however, this might not be the best option for you and it’s best to have a chat with an accountant about this (hint: me), just to make sure.
If you’re a self-employed music teacher for instance, you’ll probably need to travel to and from lessons (unless you choose to have these within your own home). You can therefore claim on petrol for the business use of your vehicle only – so that can be the standard rate of 45p per mile (first 10,000 miles) and then 25p per mile after that. Keep track of your mileage and the journeys you take so you can track this accurately for your bookkeeping. Likewise, if you travel to auditions and performances, you can also claim on these travel costs too.
You might decide to teach your music lessons in your own home, or use your spare room as an office. This means that you’re using some parts of your house / flat as part of your business. You can therefore claim a certain proportion of your insurance, heating costs, electricity, council tax, and repairs based on what you have as business usage. This can be complicated however, so an easier way to approach this is to claim a flat expenses rate, which is set by HMRC, based on the hours you work at home. You’ll need to keep a record of all of your hours working, whether you’ve got a lesson in progress or just using the time to contact venues for gigs.
As a musician in 2020, you’re more than likely going to use some kind of electrical equipment to conduct your work, whether that’s mixing new sounds, or simply emailing your students to arrange lessons. Things like iPads, laptops, and cameras can be claimed as expenses if they are used for business purposes.
You have unique expenses as a musician, so it’s important to keep a note of these, so that you don’t get caught out paying more tax than is needed.
- Hiring venues or premises for teaching can be claimed back
- Trade subscriptions
- Food and drink when performing i.e. on a ‘business trip’
- Hotel or lodging expenses – as you may need to go overseas or further afield for a gig
- Clothing – this is a tricky one, as clothing and footwear can be used for dual purposes. However, you may have concert dress that you need to purchase if you’re in a orchestra, or you have a specific costume that you perform in, as long as you can prove it is only for the purposes of performance, you may be able to claim it as an expense
- Dry cleaning – obviously not for all your clothing, but those that you use for performances
- Sheet music / books / arrangements
- Computer software
- Marketing – you might need someone to manage your social media channels or build you a new website; all these costs count as business expenses and can be deducted
- Instrument insurance and indemnity insurance
- Accountancy fees (hint: mine)
Remember, good record keeping is the best way to ensure you can claim back everything that’s allocated to you. At Alchemy Accountancy, we use FreeAgent, a clean and simple system that allows you to log everything you need. Then I can sort the rest (not to blow my own trumpet).
Talk to us today if you’re a budding musician or established in the music industry and are looking for an accountant who’s singing from the same hymn sheet (I cringed when I wrote that as well).