Tax Question

Philly_Q

Whitecat said:

You may not have to depreciate it - there is a Capital Allowance relief scheme that basically lets you offset 100% of the cost of some things against revenue in one tax year. You would probably have to be doing it full-time for that to be allowable. Something to ask your accountant about - a wis for he who suggested that taking tax advice on a guitar forum isn’t the best move.

Annual Investment Allowance.

The asset would be depreciated in the accounts, as Ronnie Hotdogs says... but depreciation isn't allowable for tax.  So in the tax computation you'd add back the depreciation then deduct capital allowances. 

However, for the last several years there's been the annual investment allowance, which means pretty much what you said - for small businesses you'll effectively get 100% capital allowances in the first year.

It all comes back to what TTony says though, it's got to actually be a business.

Whitecat

Philly_Q said:

Whitecat said:

You may not have to depreciate it - there is a Capital Allowance relief scheme that basically lets you offset 100% of the cost of some things against revenue in one tax year. You would probably have to be doing it full-time for that to be allowable. Something to ask your accountant about - a wis for he who suggested that taking tax advice on a guitar forum isn’t the best move.

Annual Investment Allowance.

The asset would be depreciated in the accounts, as Ronnie Hotdogs says... but depreciation isn't allowable for tax.  So in the tax computation you'd add back the depreciation then deduct capital allowances. 

However, for the last several years there's been the annual investment allowance, which means pretty much what you said - for small businesses you'll effectively get 100% capital allowances in the first year.

It all comes back to what TTony says though, it's got to actually be a business.

Thanks, yes, that's what I was thinking of, the AIA. 

As I suggested before and as you say doing it full-time would probably be a pre-requisite.

RonnieHotdogs

Philly_Q said:

It all comes back to what TTony says though, it's got to actually be a business.

why can't he declare the income and relevant costs through his personal tax return ? 

stuartryanmusic

I once had a plumber gleefully tell me how he claimed his surfboard and wetsuit as an expense - his claim being that every time he had to move through a flooded loft it was surfboard/wetsuit time...I have a suspicion that probably came back to bite him at some point 

Philly_Q

RonnieHotdogs said:

Philly_Q said:

It all comes back to what TTony says though, it's got to actually be a business.

why can't he declare the income and relevant costs through his personal tax return ? 

You can, but you'd be using the separate self-employment pages of the tax return.  The point was, if you're not declaring income from a business as a self-employed musician, you can't claim any expenses against that income.*

* Well in fact you could have a self-employed business which made a loss, but you couldn't offset those losses against any other income (e.g. from employment or property), except in the same tax year.  If you keep making losses, all you could do is carry forward those losses to offset against future profits from the same trade.  So to go back to the OP's question, there'd be no point trying to claim music gear as a business expense unless there's actually some business income to set it off against (bearing in mind that if you claim to be carrying on a business it must be with a view to making a profit).

downbytheriver

When it comes to expenses, travel expenses, to and from gigs, gig prospecting etc etc will off set almost entirely most hobby musicians income (if you play over a decent area).