But what, you say? I’ve just done them! I locked myself in a basement with energy bars and coffee for a week straight, wading through tea-stained receipts in a plastic bag (and how did that second bag end up behind the sofa?) and then trying to work out how much of my rent I can deduct and whether I should claim my instrument on capital allowance. And how can I forget the last six months of wondering vaguely if I have put aside enough money to pay my taxes, stressing about it, and having a gin and tonic and hoping it all goes away? Isn’t that fun? The best part of being a musician?
Of course not. Musicians are supposed to play music. So, while the memory of that unutterable hell is fresh in your mind, I present to you the Official Encore Stress-Free Guide to Doing your Tax as a Freelance Musician, or OESFGDTFM. Now you’ve made it through that acronym, the most complicated bit of the taxes is done already, so go and make a cup of tea and pat yourself on the back before following the easy steps below.
Step 1: track expenses
- Go to Ryman’s and buy yourself a fun set of 5 folders. Ryman’s is fun and you will feel very accomplished. Save the receipt in your purse. Do NOT give it to your cat to play with or use it as a napkin.
- Label the folders:
(You can customise these labels as you need or add more folders.)
- Open your computer or tablet and create a Google sheet (free spreadsheet, available as an app or in the browser) or Excel spreadsheet.
- Open the handy spreadsheet we created just for you. Copy and paste it into your own spreadsheet.
- Take out your receipt from the Ryman’s purchase, add the data to the sheet and put the paper receipt in the Office folder.
- Repeat step 5 with everything you have a paper receipt for. Put a note in your diary to empty your purse out every two weeks.
- Add online purchases to the sheet immediately and create a new email folder to file them in (e.g. Taxes 2015 – 2016).
- The autosum feature will automatically add up how much money you have spent.
Step 2: track income
- Using the other tab on the spreadsheet, enter the info for each gig you do. Enter an item for every individual payment – e.g. if you are doing three rehearsals and a concert, you should have four separate entries.
- The autosum feature will add up how much money you have made. It’s also an easy way to check that you have in fact been paid for gigs you have done! (A month is the standard length of time, just in case you were wondering.)
Bits and bobs of advice
- You can do your taxes yourself. However, there are accountants who specialise in musicians and can be well worth the investment (usually between £180 – £400, depending on your income and the accountant’s fees), as they can usually claim more allowances than you might realise and can offer protection against government audits. We recommend Simon Lees of Seaforth Taxation Ltd ([email protected]).
- If this is your first year paying self-employed taxes, you will pay 1.5 times the amount you otherwise would – the HMRC very kindly take payment on account for next year’s tax bill. They are so thoughtful.
Check out what exactly you can claim against your taxes on the HMRC’s useful document.
- If you haven’t filed taxes before, you will need two numbers to do your taxes: a National Insurance number and a Unique Taxpayer Reference number (UTR). Make sure to apply early!