Making money from gigs and HMRC

JayGee

RedRabbit said:

Always so much well meaning but misleading advice on these threads.

If you are earning from gigging then you should be registered with HMRC as self employed (or otherwise depending on situation).  Intention doesn't matter and neither does level of earning.  If your on PAYE then presumably you are already earning enough that any extra income should be subject to tax therefore HMRC are interested.

If I add up travel expenses to/from rehearsal and paid gigs at the HMRC approved rates, the money I put into the "band kitty" (basically a tenner every time we rehearse to cover rehearsal room hire with a bit over which pays for recording when the surplus builds up enough to cover a useful amount of studio time) and set that against my share of what we've been paid for gigs then I'm definitely running at a loss before I even think about the capital and maintenance costs on gear. This would obviously change if we started playing more/better gigs but until/unless that happens I'm taking the view that I'm not earning anything from gigging and keeping a journal of gig/rehearsal dates, locations, costs, payments etc as supporting evidence.

If that's not enough then unless I'm consistently seeing enough cash flow for someone else to do pretty much all of the work I want nothing to do with it. 

In a previous existence I've hosted employer PAYE audits on several ocasions, been on the wrong end of an HMRC employment status investigation (successfully!), and I simply want nothing to do with anything more complicated than the employment related sections of a standard self-asessment form these days. Certainly to keep less than 60% (I'm in the 40% tax band already from employment) of the handful of peanuts a typical pub gig pays It's Just Not Worth The Effort and I'd rather (metaphorically speaking) just go back to the bedroom.

Way to go Hector...

Catthan

That's excellent @ToneControl, thanks

nickp

jd0272

I contacted HMRC ages ago about this. I managed, thankfully, to speak to a lovely woman who had a brain. Basically, if it ain't your main source of income, you're not relying on it to pay yer mortgage and feed yer kids, if it's not supplying several caribbean holidays per annum, they are not fucking bothered. It would cost them more to process than it would recoup for the Overlords. That's assuming YOU don't take their noses and rub it in the shit about it. 

If you feel the need to declare it and can get some fiscal benefit from that, well done. Wish I could   They are actually less mercenary than eBay fees.

Our lead widdler works for HMRC. Says we should be playing more gigs and making more. In the grand scheme of things, it doesn't even scratch the surface folks.

chillidoggy

Mrs C usually takes gig of any gig money for me. Generally by pouring it down her neck in liquid form during the event, with her mate and drinking partner the bassist's missus, and we end up with fuck all.

Catthan

I've had a chat with our keys man who s a full time pro about this and he was saying we re primarily aiming at the corporate side of functions rather than weddings and there will be invoices and formalities and I'd better look into it once we start earning. He also hinted smth about how it's convenient when after a gig band members fuck off to the bar or for a cig and the risks of having gear stolen etc which means that it will be difficult to sink my earnings down the hatch even though I won't be driving for a least a month after we start playing.. Oh well.

hywelg

One thing about gear purchases. They are not an allowable expense in any earnings scenario, unless they are short life items, like drum skins or guitar picks and strings. A guitar purchase would be a capital asset purchase and must be treated as such. If you earn from playing, but it is also a hobby since you are in full or part time PAYE employment then you have to apportion the gig/rehearsal use against private use and be able to justify it. The proportion that an item gets used for  the purpose of earning an income, including practising for the gig,  is then claimable as a capital asset allowance.

All capital purchases have a first year allowance which in the past has been 100% but it might not be now for Plant and Machinery (the category gig equipment would fall into). If the first year allowance is not 100% then the balance is claimable as a writing down allowance year on year until the whole value of the asset has been claimed.

Basically its a pain in the arse working this out, its the one thing I get my accountant to do for me. I used to run a spreadsheet to keep track of the asset pool for my business (no music related) but I gave up as I was always wrong compared to the accountant.

digitalkettle

If you claim for your assets, it can be expensive to close your business and keep hold of them (I think).

hywelg

digitalkettle said:

If you claim for your assets, it can be expensive to close your business and keep hold of them (I think).

Indeed, the asset belongs to the business, and any disposal has to be credited/debited to your capital allowance claim. You must be able to justify what you sell it for. So you can't just say a £1000 guitar is now worth nothing and sell it to yourself for 1p. 

digitalkettle

That's the one...just thought I'd mention it before anyone started scheming

Catthan

Thanks guys,

I'm getting confused on the difference between capital assets claims and depreciation.

Is capital asset claim the tax relief you can claim due to depreciation?

hywelg

Catthan said:

Thanks guys,

I'm getting confused on the difference between capital assets claims and depreciation.

Is capital asset claim the tax relief you can claim due to depreciation?

Deprecation is an accounting term that applies to the reducing value of (or otherwise, say for vintage gear) assets, however you cannot claim for depreciation, you can only claim for a capital asset allowance.You keep all assets in a 'pool' that you claim against each year. HMRC lays down how much and when you can claim for your capital assets.

It has been the case that a First Year Allowance of 100% has been allowed on certain Plant and Machinery, IT equipment for example. I'm not sure if this still applies. It might well be that the FYA is now 40%. So on purchase 40% of the cost goes into your Capital allowance claim. The value of said asset is then reduced by 40% . The next year you will be able to claim a further allowance of say, 20% of this reduced value, and the asset value is then further reduced by 20% so its 'pool' value is now lower again. You keep claiming this way until you either dispose of it or write it off or its value is insignificant.

So in essence there are two values of an asset, the value against which you can claim to lower your tax liability, your capital asset allowance, and the value to the business if it should sell up and dispose of all assets which have depreciated since they were acquired.They are not the same thing. Depreciation is a real world term, a capital asset  allowance is just between you and HMRC.

Phil_aka_Pip

I'm surprised nobody has mentioned the MU yet. Their members handbook has very helpful advice on the subject (and their subs are tax-deductible).

chrishill901

Not to hijack but I was curious how it would work if you DON'T take an income from it. If we actually get paid for a gig then we just keep it in the 'band fund' which is used for things like recording sessions, CD duplication etc. Nobody every takes money from the band, but we dont earn much at all. We we thinking of setting up a band bank account as we get more gigs but thats only so we dont lose the money bag... will we have to set up a business in the eyes of HMRC to do this?

xJonnysixstring

I own an agency and employ lots of musicians some full time and some part time myself included, Starting a business is going to mean year ends and books being produced which is likely to cost more in accounting than its worth. Register as self employed which you can do being PAYE as well its most likely that gear purchases, depreciation, fuel even clothes as stage wear and non alcoholic refreshments can be claimed against your earnings and you won't have to pay tax, but will have to fill out a SA return. The beauty of being PAYE is that you NI will be covered by your employer so no need to pay twice. My advice is that in this day and age you don't want to fuck with the tax man and definitely not the VAT man. Also check out www.sonicartists.com (shameless business plug)

57Deluxe

buy gear - sell it...

Handsome_Chris

@Catthan, forget it.  Give up, go home, and become a woodwork teacher in Norway.

You will never make a decent wage while @SirAxeMan and his teatime trio are giving it away at £250 for a wedding. lol

http://www.thefretboard.co.uk/discussion/8441/band-issue-have-we-been-fair

Handsome_Chris

It there scope to do a whole thread/blog type thing on this?

xJonnysixstring

Handsome_Chris said:

@Catthan, forget it.  Give up, go home, and become a woodwork teacher in Norway.

You will never make a decent wage while @SirAxeMan and his teatime trio are giving it away at £250 for a wedding. lol

http://www.thefretboard.co.uk/discussion/8441/band-issue-have-we-been-fair

Disagree massively, Sure if you want to play Slayer every night in your local pub you might not make a living out of it, but if you compromise and play the right venues then absolutely. I have been playing pro since age 18 now 34, I have substituted the live playing with sessions, song writing and most reliably teaching, Now made a unintentional but rewarding move into being an honest agent which has served me well for the past few years. There IS a living to be made you just need to have the balls to search it out, Oh yeah and learn to sight read! I have a family, a house, cars and all the usual things that 9-5ers have too I just did it on my terms, and before I get a slating I don't come from a rich family, or have a rich wife, I am just a jobbing muso and agent and very proud.

Handsome_Chris

Jonnysixstring said:

Handsome_Chris said:

@Catthan, forget it.  Give up, go home, and become a woodwork teacher in Norway.

You will never make a decent wage while @SirAxeMan and his teatime trio are giving it away at £250 for a wedding. lol

http://www.thefretboard.co.uk/discussion/8441/band-issue-have-we-been-fair

Disagree massively, Sure if you want to play Slayer every night in your local pub you might not make a living out of it, but if you compromise and play the right venues then absolutely. I have been playing pro since age 18 now 34, I have substituted the live playing with sessions, song writing and most reliably teaching, Now made a unintentional but rewarding move into being an honest agent which has served me well for the past few years. There IS a living to be made you just need to have the balls to search it out, Oh yeah and learn to sight read! I have a family, a house, cars and all the usual things that 9-5ers have too I just did it on my terms, and before I get a slating I don't come from a rich family, or have a rich wife, I am just a jobbing muso and agent and very proud.

Pardon me. I should have explained that I was joking.  Also trying to make the point of don't sell yourself cheap, hence the reference SirAxeMan's thread which included that issue.

I really need to be more literal on here.