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Navigating those things many of us may not be keen on getting around to…
Let’s face it as music creators and artists, taxes, deductions, and other earnings aren’t the most thrilling topics to us, but they’re essential to understand, so we can be fully prepared as we develop our work in the music industry.
A ‘Portfolio career’ is a term often used for us music creators and others working in the music industry, as we often have many ‘strings to our bow’.. meaning more than one skill or resource within our professional music work.
From performing, to teaching, composing to arranging and musical directing, some people focus on one, and many can even focus on them all. Free-lance / self-employed work underpins the majority of artists and music creators incomes.
According to the MU, ‘Only 10% of musicians are full-time salaried employees. Half of musicians have no regular employment whatsoever. The vast majority of musicians (94%) work freelance for all or part of their income’.
For those of us focusing on creative output and fundamentally getting work, from sometimes many disparate areas – taxes and self-employment can bring a lot of confusion in our daily lives.
We are here to help you; we came up with this short list of websites that have information on how to start:
Whether you’re just starting in music, or it is your main income, you must pay taxes to HMRC on anything you earn from it. If you’re doing it yourself, it’s good to stay on top of that and do your calculations weekly/monthly to prevent you from spending a week before the tax deadline figuring it all out.
In the UK, earnings below £12,570 are tax-free. If you earn more, we recommend putting on the side 20% of everything you earn to not end up spending it all and then worrying you’re not able to pay your taxes. If you earn more than £50,270 (per year), your tax will go up to 40%.
HMRC will calculate how much Income Tax you need to pay based on the following:
Any earnings from gigs or concerts
Tips or bonuses paid to you by a venue
CD, vinyl or online stream sales
Money earned from busking
Make sure you keep all your receipts and invoices in case HMRC ask for it.
Here are some quick finance tips from Musicians Union:
As a self-employed musician you’ll be solely responsible for keeping a record of your earnings. You must also ensure that you pay the correct tax to HMRC based on your income.
There are many useful tools that can help organising your finance. One of them is widely recommended QuickBooks. QuickBooks is a small business accounting software with free award-winning phone support. All you need to do is connect it to your internet banking and you’d be able to access all your transactions in one place. Then you need to choose which ones are your business earnings/expenditure, and QuickBooks will do the calculations for you. You can also upload your receipts and invoices straight to your account and never worry again about losing it!