Sunday, June 28, 2015

Do Hobby Artists need to complete Tax Returns?

This weekend I got my Notice to complete a tax return from HM Revenue & Customs. It shouted at me "It's time to complete your tax return"!

My tax return - with the personal bits removed
Do you think you need to complete Tax Return?

Do hobby artists need to complete Tax Returns?

The simple answer is "it depends".

In the UK, a hobby artist can find out if they have to complete a tax return by completing a very simple questionnaire called Check if you need to fill in a Self Assessment tax return which is available on the main government website.

Here are some reasons why people who are not full time professional artists living in the UK might need to complete a tax return:
  • you were self-employed - you can deduct allowable expenses. I'm retired and self-employed (on a part-time basis) so I complete a tax return.  All serious artists should be completing a tax return.
  • you got £2,500 or more in untaxed income (contact the helpline if it was less than £2,500)
  • you had income from abroad that you needed to pay tax on - for all those selling artwork or otherwise generating income outside the UK - no matter how little money you made and no matter which account it's currently sitting in.
Essentially the first difference between being self-employed and casual income is the degree of intent and organisation. Income might qualify as casual income (eg hobby artist) if making AND SELLING art is occasional and/or not very organised and/or of very low value (say, under £2,500 per year). The second difference is the extent to which you can claim expenses. You can claim expenses related to running a business if that's what you are doing.
You are probably self-employed if you:
  • run your own business and take responsibility for its success or failure
  • have several customers at the same time
  • can decide how, when and where you do your work 
  • are free to hire other people to do the work for you or help you at your own expense
  • provide the main items of equipment to do your work
You can reference Tax Tips for Artists on my Art Business - for Artists website - which includes advice for hobby artists from those who advise about tax.

Do read my Ten Tax Tips for Artists and Ten More Tax Tips for Artists

Don't Forget

The tax year is from 6 April to 5 April the following year
If you get an email or letter from HM Revenue and Customs (HMRC) telling you send a return, you must send it - even if you don’t have any tax to pay.
Plus you must pay tax on all earned income (net of allowable expenses) above your personal tax allowance.

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