If you run a video production company producing promotional films, commercials or digital content, keeping your tax bill down can make a big difference to your business’s viability.
Fortunately, there are various ways to do that, including keeping effective accounting records, identifying any creative industry or R&D tax reliefs you’re eligible for, and claiming allowable expenses.
Can you write off a video camera as a business expense?
As with any other business expense, the “wholly and exclusively” rule applies. The expenditure must be incurred wholly and exclusively for the purposes of your business. In the case of companies, a third condition applies – it must also be “necessarily” incurred for business reasons.
This is one of the most common questions I hear from filmmakers, probably because a video camera seems like one of those things you might buy out of a personal interest, not just for a business.
I’ve explained the way this applies to cameras for photographers here, and the same goes for video. Essentially, if you run a video production business and you’ve bought a camera to use in it, you’re unlikely to get any questions about it being a valid expense.
Because the camera is a piece of equipment, you should treat it as a capital allowance if you use traditional accounting, or an allowable expense if you use the cash basis. If you’re not sure which one of those you should be using, get in touch for advice.
The same goes for any other equipment you buy wholly and exclusively for your business, like microphones, tripods, rigs, lighting and so on.
You can claim for the editing software you use for your business, too. Unlike pieces of equipment, this should be treated as an allowable expense, not a capital allowance.
Is studio rent an allowable expense?
If you work from commercial business premises like a studio, you can claim your rent as an allowable expense, as well as extra costs like heating, lighting and business rates. Security systems for a business premises usually count as expenses too, which can be helpful if you need to store expensive equipment.
You can also claim some expenses if you work from home, for example if you handle post-production from your home office.
To do this, you’ll need to work out what portion of your bills are actually going towards business use, rather than your usual home use. This doesn’t have to be exact, but HMRC asks that you use a “reasonable method” to work it out, such as considering how many rooms in your house you use for your business, and the amount of time you spend working in them.
Travelling to and from a shoot
Travel costs like fuel, vehicle insurance, repairs and servicing, parking fees, train or bus fares can all be claimed as allowable expenses if they’re incurred while travelling as part of your job.
You should also be able to claim for the cost of accommodation or meals on any overnight business trips you take.
You can’t claim for travel between home and work, however. This is straightforward enough if you regularly commute between your home and workplace, but it can get a bit more confusing if you spend a lot of time travelling to film in different locations.
In this case, whether you can claim the travel as an expense will depend on whether HMRC defines the location you go to as a “permanent” or “temporary” workplace.
Hiring a crew and actors
Staff costs like salaries or subcontractor fees can be claimed as allowable business expenses. This also includes pensions, benefits, agency fees, employer’s National Insurance contributions, and any bonuses that you give.
In less socially-distanced times, you might decide to get your team together for a celebration at the end of a big project, or host a group meal to boost morale. This could count as an allowable expense, as you can claim for staff entertainment as long as it’s for business purposes. There’s a tax exemption for annual events, too, but these must be open to all your employees and cost no more than £150 per head in the year.
Business entertainment, on the other hand, is not an allowable expense. This is where you entertain clients, potential clients, or anyone else who’s not an employee of your business, so an event entertaining subcontractors would not be deductible.
Other expenses for video production
More general business costs, like the money you spend on advertising and marketing, or legal and financial costs, can qualify as allowable expenses too.
You can claim training courses as an allowable expense if they help you to improve the skills and knowledge you use in your business – a refresher course, for example.
You can’t claim for courses that you’re taking in order to start a new business, or to expand into new areas of business, however.
Track all your expenses with ReceiptBank
Altogether, that’s a lot of different expenses to remember when you’re filling in your tax return – and you’ll need to be ready to provide evidence that you incurred those costs, too.
This is where an efficient expense management system can really help.
I recommend using ReceiptBank to keep records of all your expenses. It’s simple and easy to use, and it connects with online accounting software like Xero, so you can keep all your information tidy and organised.
Then, once your software has done the work for you and all your accounting information is in one place, you can hand it over to me and I’ll handle the rest.
Contact us to find out more about accounting for your video production business.