Paying Wages

Musicians can claim expenses if they start paying wages to anyone on more than a strictly casual basis, for example, to road crew, secretary etc. In this scenario you are going to become involved with starting a full PAYE scheme, and deducting tax, National Insurance contributions and the likes.

However, there is one very good tax saving tip — employ your husband or wife as a secretary/accounts assistant/telephonist. It is only worthwhile if he or she is not employed elsewhere, or does not have a large amount of additional income. Your partner is allowed to earn a certain amount each week before paying any tax or National Insurance contributions.

Therefore, you can pay him or her, say, £50 a week for their services without having to set up a PAYE system, if she or he has no other income to speak of. However, they have got to work for you and the wages must be paid into their own account.

There are four important conditions to consider:

1. Your partner must actually work for you, and the wage must be commercially justifiable.
2. You must actually pay your partner the money, and not just make it a bookkeeping entry. Therefore, it should be paid into a separate account in their name.
3. Your partner must remember to declare the income on his or her own tax return.
4. You may be asked by HMRC to specify your partner’s exact duties so you must make reasonable evidence of his or her work available.

Is MU Membership an allowable deduction?

A number of reports have been received of musicians who are self-employed, and are classed as such for HMRC purposes, having difficulties in offsetting their MU membership subscriptions against their taxable income. 

We understand that some local Tax Inspectors are quoting Section 343 ITEPA 2003 as the reason for this decision. This section is inappropriate, for while it severely restricts the fees and subscriptions that can be claimed, it relates only to persons taxable as employees.

The employed person will need to show that it was necessary to incur this expenditure to carry on his/her employment. Self-employed musicians are not covered by this category and should continue to claim their subscriptions as before and will need to show that this expenditure was wholly and exclusively incurred for business use.