Tax Advice and Guidance For Musicians

Note this guidance is for general information only and no-one should take action, or refrain from taking action, without obtaining professional advice.

How do employed musicians pay taxes?

If you are employed, your employer is responsible for deducting income tax and National Insurance from your salary via the PAYE system. Your employer then pays this over to HMRC on your behalf.

How much tax do musicians pay?

The amount of income tax deducted from your salary is determined using your PAYE notice, which is dependent on your tax code.

HMRC issues notices to employers to adjust the level of Income Tax rates paid for any benefits that you may receive. This includes any higher rates of tax due on other income you receive along with any relief for deductions, such as making pension payments. For example:

• Class 1 National Insurance will be deducted from your salary at a rate of 12% if you earn between the lower limit of £1,048 per month and the upper limit of £4,189 per month
• 2% is payable on all salaries above £4,189 per month (6 November 2022 onwards)

Submitting a tax return for musicians

If you're an employed musician, you may still be required to complete a tax return if your total taxable income is above the higher rate threshold and you have other income, such as bank interest or dividends.

Any additional tax due would be payable by 31 January following the end of the tax year (e.g. 31 January 2024 for the tax year that ended on 5 April 2023) with the tax return also due for filing by this date.

What can musicians claim on tax?

As an employee, you can only claim expenses against your income that are wholly and exclusively incurred in the duties of employment. HMRC is generally strict regarding what qualifies as expenditure.

In certain circumstances, commission paid to an agent is deductible for employees.

You may wish to seek professional advice what you can claim. We work with Chartered Accountants HW Fisher to ensure that musicians receive fast and appropriate support with their personal finances.

How do self-employed musician taxes work in the UK?

If you are a self-employed musician, you are responsible for your own tax and National Insurance. However, self-employed workers in the UK pay income tax on profits, not total income.

Even if you are already paying Class 1 contributions as an employee, you are required to pay Class 2 and Class 4 contributions on self-employed income subject to profit levels. If you earn more than £12,570 in profits, you need to pay Class 4 NI contributions.

Whether you're a freelance musician or you've just started teaching private music lessons, taxes still need to be paid on your profits.

How do I pay tax as a self-employed musician?

• You need to tell your local tax and social security offices that you are in business by registering as self-employed - failure to do so incurs a penalty, based on the contributions missed and the reasons for registering late
• You need to report all your income to the tax office each year and, once you have registered, HMRC will send you an annual tax return
• For the first tax year in which you become self-employed, you will not usually have to pay the tax due on profits until 31 January following the end of that year
• Subsequently, you will then normally pay your tax in two instalments, on 31 January and 31 July of each year.

Paying Class 2 national insurance contributions as a self-employed person is now done under self-assessment, but you might need to accelerate payments to claim some benefits - maternity allowance, for example. For 2023 to 2024, the Class 2 rate is £3.45 per week.

Can I claim self-employed musician tax deductions?

For the 2023/2024 tax year, a small earnings exemption can be granted to self-employed musicians who have an income below the Small Profits Threshold of £6,725. However, you may wish to continue making contributions to preserve state benefit entitlements.

You will pay zero income on your profits as a self-employed musician if you earn less than £12,570 in a single tax year.

And if you have gaps in your record, you might choose to pay voluntary National Insurance, which can cover contributions for the previous two years.

You can find more information about self-employment from HMRC.

Does HMRC collect freelance musician taxes?

If you started performing as a hobby musician in the UK but you are now earning on a freelance basis, you may need to declare yourself as self-employed to HMRC.

As soon as you start to make any money from your musical endeavours, you should start keeping a record of all income and expenses. Once you generate over £1,000 per year, you need to declare your income to HMRC.

Can musicians claim instruments back on tax?

Your tax bill will be lower if you accurately declare all your expenses, meaning that it is just as important to record your outgoings as it is your income. If you are self-employed, the money you spend toward your business is not classed as profit and therefore is not taxable.

However, there are a few unique musician tax deductions about which you should know.

For this reason, you should familiarise yourself with an exhaustive list of items that musicians can write off before you submit your tax return to HMRC. These include but are not limited to:

• Instrument insurance and repairs
• Cleaning materials for your instruments
• Interest paid on a loan to purchase an item for your business
• Advertising costs
• Hire costs for rehearsal rooms and studios