Photographers

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.

The following list is not exhaustive but gives an indication of the general expenses that can be claimed by professional photographers:

• Motor fuel.
• Parking and tolls.
• Postage & stationary.
• Computer consumables.
• New equipment.
• Equipment repairs.
• Framing/Mounting/Processing costs
• Continuing professional education (not initial training costs*).
• Bank charges on a business account.
• Telephone/mobile phone charges.
• Accountancy charges.

If you have expenses that are not on this list, you may be able to claim them.

Keep a full record of ALL expenses and discuss them with your accountant. They may be tax deductible

*Unfortunately the costs of training to become a photographer cannot be claimed against your tax.

Possibly.

If your clothing is protective or it has a business logo embroidered on it, the cost of buying these items could be claimed. Also, cleaning costs may be shown in the accounts. The clothing is clearly identifiable as work wear, and is ‘wholly and exclusively’ used for the business. You would not wear it other than for work.

However if you bought ordinary, everyday clothing from, say, M & S the answer is "No". Under current legislation these items are regarded as having a dual purpose. You could wear them outside of work. They would therefore not be classed as tax-deductible expenses.

Paying your spouse or partner is possible but rules apply.

Where a spouse or partner has little or no other income there may be tax advantages in paying them for their assistance in running the business. It is fairly common. However, this has to be treated in exactly the same way as you would any other person working for you.

The wages have to be for actual work done; the wages have to be physically paid and the rate of pay must match the duties performed.

In order to justify any such payments, it may help to create a job specification first.  Simply list the tasks that are involved, making appointments, doing the bookkeeping, arranging tests etc.

Then you need to establish the market rate for such a job. How much would you have to pay someone else to do these tasks for you? Keep a simple diary note of the hours worked per week, then make regular payments via cheque for the wages due in relation to the hours worked.

As mentioned above, you need to pay the going rate for the job. If this exceeds either £107 per week or £428 per month you may need to operate a full payroll scheme, which would need to be registered with HMRC.

If you do set up a payroll there may have advantages as your spouse or partner could receive some much needed National Insurance credits.

It is recommended that you speak to your accountant before you make payments to ensure you do not breach of rules. Whilst speaking to your accountant you should also ask about forming a partnership to help reduce your tax bill - it may be a better option than specifically paying your spouse / partner.

Unfortunately, the answer is probably not.

This is based on the test case ‘Prince v Mapp [1969], in which a professional guitar player (who also played it as a hobby) cut his finger. The injury did not heal and in order to resume his career he underwent surgery. Unfortunately the judge in the case found there was some ‘duality of purpose’ to the surgery - it would allow him to also resume playing his guitar as a hobby – and thus the cost did not satisfy the ‘wholly and exclusively’ test.

It would be very difficult to satisfy the ‘wholly and exclusively’ test, and this is an argument HMRC would most likely pursue. As always you should discuss such items with your Accountant.

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:

• Bank transactions, including payments from and deposits into the bank. 
• Cash payments and receipts
• Credit card payments

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.

It depends.

The rules on gifts are similar to those on business entertaining in that such expenditure is not tax deductible. Taking a business contact to lunch is not tax deductible, and by the same logic giving a gift to a student is not either. HMRC's rules are at first quite clear…

‘You should give no deduction unless it can be shown that there is some contractual obligation to offer the gift’

However, there is a grey area. In the same instructions it also says that some gifts may in fact be part of a sale. In such circumstances the cost of the gift is allowable. In the example given, a customer buys a new car and the garage presents him with a bunch of flowers on collection. The cost of the flowers is tax deductible, as there is an assumption they have been paid for by the customer.

What about photographers? The rules on entertaining would probably mean in reality the cost of a gift would not be allowed.

However, if the gift was a form of advertising – a mug or pen with your photography name and logo on it – you may be able to claim on the basis that it is advertising and promotion.

As always, you should ask your accountant.