start-up author tax advice needed

n3phi1im

I am about to embark on a novel writing project which I hope will develop into a rich and rewarding career. The problem is that I can't afford to do this full time at the moment, I will have to write part-time and still work a full time PAYE job.

My question is this (and I am sure it will be of interest to many budding writers out there)

If I declare myself self-employed as a writer, can I offset the expenses (negative profit) from researching and writing the book agaist my PAYE income and thus pay less tax?

I did google for this but advice on this specific situation is surprisingly scarce. All I found was this http://www.startups.co.uk/ but I am not sure if it is UK or US advice.

Murdina

In principle the answer on that site is correct and would potentially apply.

However, if you have no track record at all of published work, then I do not think that HMRC will accept that you have commenced a profession of "author" until such time as they see either an advance or a contract for work, or some actual sales. This would not rule out getting relief for the expenses you have incurred meanwhile, so a careful record should be kept, but these would be relieved as "pre trading" expenses which means you add them all up (so long as you do not go back I think more than 7 years) and allow them as a tax deduction on the first day your new profession of author actually starts. In other words, it could be a year or two away. If allowing those expenses creates a tax loss, then this can be set off in the normal way i.e. against other income, against prior years' income (special rule for commencement losses) or carried forward against future profits from being an author.