John's Writing Tips.
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THE TAX MAN AND WRITERS
You have been writing for years and, suddenly, you make serious money from
an article in a national newspaper or that definitive novel you always promised
yourself you would write. Dream time, you say, but it happens, and all of
a sudden you have a tax problem. What do you do?
Rule One: Smile. Well done. Hard work and perseverance have
paid off at last, and you are suddenly featured in the newspapers, the radio.
Maybe even television.
THEN the Tax Man sends you a Self Assessment Tax Return. He wants to know
all your taxable income so that he can tax it. Instead of wallowing in adulation
you are now desperately trying to think up ways of avoiding the tax bill,
or minimise it at least.
Believe it or not, the Inland Revenue is staffed by humans who begrudge paying
tax as much as you do. They want to help you to reduce your tax bill so they
ask. ‘Tell me, Successful Author, what costs did you incur in writing
this book? Have you the receipts?’
And you say…?
Rule Two: What follows can only be regarded as a very general guide to UK Taxation. Every country has its own rules, but the basic principles hold firm.
Rule Three: The Tax Officer may love your book and want
you to sign a copy, but they will not be impressed if your creative writing
carries on into the Tax Return. Claims for expenses to set off against your
income from writing have to be based on fact.
Be reasonable and have a claim for expenses supported by invoices where possible.
With or without a receipt, the Tax Officer is going to accept a claim for
a $3 coffee and Danish on the slopes of Mount St Helen when there isn’t
another diner within fifty miles. But if you happen to be in London you better
have a good excuse as to why you HAD to dine at the Café Royal.
Rule Four: Plan ahead. You have just started writing, but you are going to write the definitive novel of the twenty-first century. Some day, maybe ten years from now, tax reality will hit. So start with your diary, and remember this is a work of fact, leave the fiction for the novel.
Keep a diary for every year. Enter what writing expenses you incur as you
go along. Don’t forget the income as well. You know that handful of
pounds you got from the local paper for articles or the unexpected cheque
from the local school for hosting a writing class.
If you’re sure an expense is allowable put it down. If it or part of
it MIGHT be allowable, put it down as well, with a little note as to what
you think the business element is and why. It’s easier to remember
your thinking behind the claim now than in ten years time. This is particularly
important when it comes to telephone bills.
Rule Four: Think big and wide when claiming. Don’t assume something is not claimable. Where you have doubts, tell the Tax Officer when finally making that return and let them say no. The Tax rules are a bit like the man from Delmonte, it’s surprising what they say yes to. And remember, they are on your side.
In Britain, all expenses incurred can be carried forward year after year until that day when the best seller finally starts to pay serious money. A little effort now can save a lot of money later.
© John McAllister, 2005
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