Ten To A Greater Extent Than Taxation Tips For Artists

Round close this fourth dimension of twelvemonth - but equally I'm submitting my taxation render to Her Majesty's Revenue & Customs, I write a weblog send close taxation - for artists.

Last twelvemonth it was Ten Tax Tips for Artists.

Two taxation collectors (1540s) by Marinus van Reymerswaele

This twelvemonth I've come upward up alongside ten to a greater extent than tips close taxation for artists.

Get your submission inwards on fourth dimension in addition to avoid fiscal penalties
Pay your taxation on time
Make certain y'all get got funds available to pay the taxation due
Set upward a savings occupation concern human relationship for funds laid aside for tax
Keep a clear distinction inwards your files for dissimilar years
Have a summary worksheet page for your taxation workbook
Keep a annotation of the central charge per unit of measurement y'all usage for international income in addition to expenses
Only claim 100% of an expense if it is 100% a occupation concern expense
Don't forget to brand a annotation of all the occupation concern journeys y'all make
A UTR is essential for all short-term contracts

So - if you're interested - read on in addition to honor out more.

1. Get your submission inwards on fourth dimension in addition to avoid fiscal penalties

Financial penalties for belatedly submission tin flaming survive steep. This link - Tax render deadlines in addition to penalties - and the tabular array below provides data close the punishment scheme relating to belatedly submissions inwards the UK. You've got 10 months later the halt of the taxation twelvemonth to learn your taxation render in.

Length of delay	Penalty y'all volition get got to pay

1 twenty-four hours late	A punishment of £100. This applies fifty-fifty if y'all get got no taxation to pay or get got paid the taxation y'all owe.

3 months late	£10 for each next twenty-four hours - upward to a ninety twenty-four hours maximum of £900. This is equally good equally the fixed punishment above.

6 months late	£300 or 5% of the taxation due, whichever is the higher. This is equally good equally the penalties above.

12 months late	£300 or 5% of the taxation due, whichever is the higher.
	In serious cases y'all may survive asked to pay upward to 100% of the taxation due instead. In to a greater extent than or less cases the penalties tin flaming survive fifty-fifty higher than this.
	These are equally good equally the penalties above.

This is the HMRC's listing of reasonable excuses for filing late - What counts equally a reasonable excuse for filing an online render late?. One twelvemonth I had to usage the outset 1 - but they did know that the scheme was completely overstretched alongside people bombarding them alongside finally infinitesimal returns!

Generally, a 'reasonable excuse' is when to a greater extent than or less unforeseeable or unusual number beyond your command has prevented y'all from filing your render on time. For example:

a failure inwards the HMRC reckoner system

your reckoner breaks downward but earlier or during the training of your online return

a serious illness, disability or serious mental wellness status has made y'all incapable of filing your taxation return

you registered for HMRC Online Services but didn't learn your Activation Code inwards time

2. Pay your taxation on time

The other argue y'all tin flaming learn a fiscal punishment is if y'all neglect to pay your taxation on time.

This the HMRC contention of Interest in addition to penalties if y'all don't pay your taxation on time

Length of delay	Penalty y'all volition get got to pay
30 days late	5% of the taxation y'all owe at that date
6 months late	5% of the taxation y'all owe at that date. This is equally good equally the 5% above.
12 months late	5% of the taxation unpaid at that date. This equally good equally the ii 5% penalties above

3. Make certain y'all get got funds available to pay the taxation due

This involves ii things:

making certain y'all pose funds aside every fourth dimension y'all have income
making certain those funds tin flaming survive accessed easily to facilitate payment.

You demand to piece of work out what's a reasonable percent of funds to laid aside for tax. This depends on:

level of projected income
tax allowances y'all are eligible for - which trim back the amount of income on which taxation is due
relevant occupation concern expenditure which volition offset taxation due

This is complicated if y'all likewise have funds from other sources (eg a salary of pension) where PAYE assumes usage of the whole of the personal allowance when deducting tax

Influenza A virus subtype H5N1 useful "rule of thumb" used past times many is to usage the marginal charge per unit of measurement of taxation equally a proxy for the amount due. Thus inwards the United Kingdom of Great Britain in addition to Northern Ireland if y'all brand £10,000 internet turn a profit assume y'all demand to pay 20% ie £2,000 equally tax.

4. Set upward a savings occupation concern human relationship for funds laid aside for tax

If you've got to pose coin on 1 side y'all mightiness equally good earn involvement on it! Just brand certain you've drawn downward inwards goodness fourth dimension in addition to transferred into the occupation concern human relationship y'all brand payments from inwards goodness time.

5. Keep a clear distinction inwards your files for dissimilar taxation years.

I've e'er got ii taxation files on the go.

One for the electrical flow taxation twelvemonth and
one for the taxation twelvemonth but gone where I've soundless to consummate the taxation return.
(once I've completed the render for the finally taxation twelvemonth I in addition to thence laid upward the folder for the side past times side taxation year!)

It's but thence slow to pose the paperwork inwards the incorrect file. Which is why I usage color coded folders alongside real big labels!

6. Have a summary worksheet page for your taxation workbook

I usage Excel for my accounts. I similar to proceed the big flick actually simple. For example, I

break out each chemical part of income into dissimilar worksheets (within the workbook) in addition to get got 1 clear contention for each.
pick upward the full gross income from each detail facial expression of income in addition to insert it into a prison theater mobile telephone on a summary sheet.

It's in addition to thence much easier to compare years to run across how income has been changing twelvemonth on year.=+'name of worksheet'!cellreference (i.e. Column Letter Row number eg F14)

To option upward a full inwards Excel

place your cursor on the prison theater mobile telephone y'all desire to transfer the summary full to (on the summary worksheet)
enter '+'
now movement your cursor to the prison theater mobile telephone where the full is on to a greater extent than or less other worksheet - in addition to striking return
the full volition survive copied to the prison theater mobile telephone inwards the summary page where y'all clicked +

7. Keep a annotation of the central charge per unit of measurement y'all usage for international income in addition to expenses

I usage xe (http://www.xe.com) - a unusual central site - to render proxy currency central rates for the engagement income became due or expenditure made (in e.g. PayPal) inwards to a greater extent than or less other currency.

The central charge per unit of measurement y'all demand to usage is the 1 which relates to when the invoice was sent or the payment was due. It's non the central charge per unit of measurement which applied when y'all transferred coin to or from your ain personal banking concern account. Any turn a profit or loss y'all made on changes inwards the central charge per unit of measurement are non necessarily anything to practise alongside your occupation concern figures (eg if y'all exit coin sitting inwards a PayPal occupation concern human relationship in addition to alone depict downward twice a year)

Doing the accounting for currency gains in addition to losses due to changes inwards the central charge per unit of measurement is actually complicated in addition to y'all actually don't desire to learn at that topographic point unless y'all actually get got to - inwards which instance employ an accountant!

8. Only claim 100% of an expense if it is 100% a occupation concern expense

The taxation human being tends to accept a real dim persuasion of those who claim personal expenses equally occupation concern expenses. It's non a goodness idea.

On the other hand, many taxation regimes empathise that to a greater extent than or less expenses relate both to abode in addition to business. A goodness illustration would survive bills for estrus in addition to light. You tin flaming prorate bills thence long equally y'all get got reasonable grounds for the percent y'all use.

Plucking a figure out of the air does non print the taxman.

So, for example, honor your utility bills.

A studio inwards the garden alongside split meters would charge per unit of measurement equally 100% if y'all tin flaming persuade the taxation human being you're a serious painter - alongside sales.
If y'all demand to prorate utility bills y'all demand to know:

The expanse of your abode - in addition to the expanse of your studio in addition to piece of work out what percent the latter is inwards relation to the former
the frequency your studio was lit in addition to heated relative to the residuum of the home.

9. Don't forget to brand a annotation of all the occupation concern journeys y'all make

The item of expense I oftentimes forget to annotation downward properly are all those journeys alongside a occupation concern purpose.

Keep a annotation the operate of journeys
claim actual terms if world transport
claim HMRC approved mileage charge per unit of measurement for all journeys past times car.

Approved mileage rates

From 2011-12	First 10,000 occupation concern miles inwards the taxation year	Each occupation concern mile over 10,000 inwards the taxation year
Cars in addition to vans	45p	25p
Motor cycles	24p	24p
Bicycles	20p	20p

10. A UTR is essential for all short-term contracts

Many artists supplement their income from sales of their artwork alongside long or brusk terms contracts for other art-related piece of work eg teaching adult education.

However organisations inwards the United Kingdom of Great Britain in addition to Northern Ireland MUST obtain ii things from whatever employee. These are:

a Unique Taxpayer Reference or UTR (the self-employment reference number formerly known equally 'schedule D') and
a National Insurance (NI) number. Without these numbers it is impossible right away to bid or apply for whatever short-term paid opportunity.

Hence if y'all desire to brand coin y'all must register alongside HMRC for self-employment taxation in addition to national insurance purposes.

and finally......

There's the enquiry of eligible occupation concern expenses - which we'll await at tomorrow.

Note: I'm non offering this equally "proper professional person advice" equally I've retired from my professional person life (who knew I qualified equally an accountant?) in addition to no longer pay a subscription to my professional person establish or professional person indemnity insurance. If your affairs are complicated in addition to y'all demand professional person advice, y'all demand to honor somebody who has electrical flow expertise.