Paying Tax on Song Royalties - Self Assessment? Please help!

Retro82

Hello,

Having called three times to HMRC and had three different people tell me three completely different things, I thought I'd better come to the real experts!

I wrote some songs and, in the last financial year, a company began distributing them in a way that paid me a small amount of royalties (total easily under £1000pa). I want to pay tax on this income (if only because I hope the amount will rise significantly in the future and want to start as I mean to go on).

Initially I was told to register as a sole trader and pay tax that way, which didn't seem right (I already have a full time job which, although broadly in media, is not connected to my songwriting)...

Having begun the government gateway registration this didn't feel right so I called up again, this time I was told that this was wrong and I just needed to fill in an SA1...

So I began this process and called for some more advice and was told that, as the total was less than £2500, I didn't even need to do that. I just need to write to them (with no particular deadline) and say what I earned and they will tax me informally like that. They said it didn't matter that the payments were regular (once a quarter) and ongoing.

This third option easily seems to be the best for me but does that sound right to everyone else? I don't want to go through that process, only to be told it should have been the SA1 (by which time I could have missed the deadline!!)

Any help or advice would be REALLY appreciated, I just want to try and do the right thing!!

Babbawah

What imaginary songs are these then?

What kind of deal do you have that all this isn't covered by your management / publisher?

Jackanory?

Retro82

Babbawah wrote: »

What imaginary songs are these then?

What kind of deal do you have that all this isn't covered by your management / publisher?

Jackanory?

Thanks for your help

Horace

You do need to set up as a sole trader and register with the HMRC - that way you can do the self assessment. You can still be self employed and be employed at the same time.

This is the correct way (not the nonsense you have come out with about writing a letter to notify the HMRC) there is no such thing as informal tax.

CKhalvashi

Babbawah wrote: »

What imaginary songs are these then?

What kind of deal do you have that all this isn't covered by your management / publisher?

Jackanory?

Not everything goes through management/publisher, as there are a lot of people dealing with independent musicians, with royalties paid through PRS. If independent and extremely small (as seems to be the case here), there's a good chance even this may not happen.

OP, you should register as self-employed until there is enough tax advantage in going Ltd. You'll need to complete tax return each year.

SunReader

Babbawah wrote: »

What imaginary songs are these then?

What kind of deal do you have that all this isn't covered by your management / publisher?

Jackanory?

Fool - the digital revolution has changed everything from the days of 78 rpm discs costing 2/6. :rotfl:

Lots of are people writing and recording music from their bedrooms nowdays, no label , no management , no producer...

Actually £1000 on this is very good going these days- i'd be inclined to keep quiet, this could easily be expenses on a pc and software, decent mics etc...

Well done, keep at it:beer:

martindow

SunReader wrote: »

Actually £1000 on this is very good going these days- i'd be inclined to keep quiet, this could easily be expenses on a pc and software, decent mics etc...

Regardless of the morality this is not good advice. If income really took off the OP would be in a pickle with earlier undeclared income.

By all means account for all of your expenses - you only pay tax on profit - but do declare it.

Savvy_Sue

Horace wrote: »

This is the correct way (not the nonsense you have come out with about writing a letter to notify the HMRC) there is no such thing as informal tax.

Actually, from the Cutting Tax board, people would say that if it is a one-off source of additional taxable income, a letter to HMRC would do the job.

But as the OP expects (or hopes for) further royalties, registering as self-employed would make more sense.

Retro82

Horace wrote: »

You do need to set up as a sole trader and register with the HMRC - that way you can do the self assessment. You can still be self employed and be employed at the same time.

This is the correct way (not the nonsense you have come out with about writing a letter to notify the HMRC) there is no such thing as informal tax.

Thanks for the reply but for small amounts you are definitely able to pay your tax informally without being a sole trader or even completing SA1 online. This isn't something I've 'come out with', it's information directly from HMRC.

Retro82

Savvy_Sue wrote: »

Actually, from the Cutting Tax board, people would say that if it is a one-off source of additional taxable income, a letter to HMRC would do the job.

But as the OP expects (or hopes for) further royalties, registering as self-employed would make more sense.

Thanks so much for this!! Yes, I think it was the fact that these payments will be ongoing that makes some people at HMRC think I should do SA1 (and the small amounts that make others think I should just write a letter). I'm going to call them one more time on Monday but I think I'm just going to try the letter option for 13/14 and then, assuming things do pick up and carry on, get everything set up for 14/15

Retro82

martindow wrote: »

Regardless of the morality this is not good advice. If income really took off the OP would be in a pickle with earlier undeclared income.

By all means account for all of your expenses - you only pay tax on profit - but do declare it.

Thanks, no I really do hope this is going to continue and grow so I want to be completely above board from the start. There were some genuine expenses incurred in producing these tracks and I will be mentioning these in the letter (don't need receipts for the letter option but almost everything I do is through paypal so I've got a record of it all!).