Below are the most common questions we have been asked regarding tax and accountancy. If you cannot find the answer you are looking for, please click here to contact us directly.
There are many expenses that can be claimed against taxable income. Everyone runs their business in a different way and they will usually incur some expenditure that is particular to them. By law you can only claim expenses that are incurred 'wholly and exclusively' for business purposes. So items that are exclusively related to your self employment should be allowed eg advertising, accountancy fee, agent fees/commission etc
However many expenses may have a ‘dual purpose,’ ie, they will have a business and a personal element and as a general rule you can only claim the business proportion of such items providing you can ascertain a business element.
The following list is not exhaustive but gives an indication of the general expenses that may be claimed by an Actor depending on the individual circumstances of the claim:
If you have expenses that are not on this list you may still be able to claim them.
Keep a full record of ALL expenses and discuss them with your accountant. They may be tax deductible
The general rule for clothing is that a self employed person cannot claim a deduction for the cost of ‘a wardrobe of everyday’. However, the cost of clothing acquired for a film, stage or TV performance is allowable. This clothing is not regarded as ‘everyday wardrobe’; it is a ‘costume’ used in a performance.
The cost of costume and grooming such as hair and makeup incurred by a performer making personal appearances, the sole purpose of which is to promote their business activities, is also allowable.
Unfortunately, the answer is probably not.
Only in exceptional circumstances will non health related operations to change personal appearance by reversing or masking the ageing process not have a private purpose.
If the purpose to change your appearance was to gratify a private wish to improve / change your appearance then no deduction will be due. However, some performers are able to show that expenditure has been incurred solely for professional purposes.
One example is a radio performer who start to do TV work. She is advised that her irregular teeth are holding back her TV work so she has cosmetic surgery to correct this. It was established with HMRC that as she was previously satisfied with her appearance then the TV work was the sole reason for the dentistry and they allowed the cost.
You should keep comprehensive records with supporting receipts.
Anyone who has undergone an investigation will know that HM Revenue & Customs can spend months looking through your records, asking probing questions and wanting what might seem as meaningless information about your business affairs. This can be both time consuming, stressful and very expensive – not just in terms of tax but in terms of lost lessons due to the time spent dealing with any investigation.
Prevention is of course better than cure.
One recommendation is to have a separate business bank account. If a credit card is preferable, then again, separating business and personal transactions into two separate cards could be helpful.
Separating your business and personal life will not only help your accountant but it will also help in the event of an HMRC investigation.
There are three general forms of transaction to record:
When deciding on how to record these transactions provision should be made to identify which receipts / payments are cash, bank or credit card. For cash receipts, it is important to identify any cash not deposited in the bank but used for sundry cash expenses or general living expenses.
There are various methods of bookkeeping, such as cash books, excel spreadsheets or online versions
Personal drawings from the business should also be easily identified. One area HMRC looks at is funding of personal expenses. If you have separate business and private accounts, either make transfers between accounts or write yourself a cheque from the business account.
Mileage records are also important. Even if you use your car almost exclusively for business some form of record should be kept to validate this. HMRC are keen to challenge business mileage where records are not complete.
One method is to record your car's total mileage at the start of your accounting year and only record your private journeys made during the year. At the end of the accounting year, work out the total mileage and deduct the private mileage. The difference is your business miles.
If you do not have sufficient evidence to support your business expenses then an investigation can mean an increased tax bill. HMRC may also make similar adjustments to the previous year’s tax bills, add on interest charges and impose penalties.
Please also bear in mind that bookkeeping records and supporting receipts should be retained for 5 year 9 months after being submitted to HMRC.
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