Self employed Photographer? Need tax advice on where to begin and help with what you can and cannot claim as a business expense on your tax return? Read on happy snapper..
Register with HMRC as a Self Employed Photographer
Whether you photograph weddings, portraits, club nights or even food going self employed is the easiest way to kick start your career as a photographer.
First things first, you must register with HMRC to let them know you are self employed and you can do that online here. Once completed you will receive a UTR number (Unique Tax Payers Reference). Your UTR is important so keep it safe, you will need it to file your Self Assessment Tax Return.
As you are self employed you are required to pay tax under Self Assessment which means you need to submit a personal Tax Return by 31 January each year detailing your trading income, the income tax and Class 2 & Class 4 National Insurance due as well as making a payment for the tax and NI due. Your tax return submitted by 31 January covers the previous tax year for example: your tax return due on 31 January 2018 details your trading income earned between 6 April 2016 to 5 April 2017.
Watch out, you are also required to make a payment on account to HMRC by 31 July each year too which is normally 50% of your previous years tax bill, so make sure you budget for this additional payment too.
Your trading income, somewhat deceivingly, actually means your trading profits (all your income less all your allowable business expenses). Generally speaking, business expenses are only tax allowable if they are ‘wholly, necessarily and exclusively’ incurred in the performance of your business. All expenses must be supported by a receipt, so make sure you keep hold of all your paper or emailed receipts. But it is really important to be aware of which expenses are allowable because they will reduce your tax bill.
Allowable Start Up Expenses for Self Employed Photographers
Starting any business usually involves some element of cost so it is worth understanding whether these expenses will attract tax relief before you start spending. Here is a list of typically allowable start up expenses relevant if you are a self employed photographer:
Your equipment are your tools, so things like cameras, tripods, lighting and soft boxes are fully allowable and can attract Annual Investment Allowance, which is another way of making tax savings. So keep all the receipts of your equipment so you can discuss deductions with your accountant.
Computer & Printer
You no doubt have to have a computer with software suitable for editing photos or for sharing with your clients. Again this, as well as the cost of your printer, will attract tax relief either as an allowable expense or under the Annual Investment Allowance rules.
A website is almost like a marketing brochure now and gives you a chance to show off your talents, experience and personality. If you are considering investing in a website then it is worth noting that the website, domain and hosting again are all allowable expenses.
Allowable Ongoing Expenses for Self Employed Photographers
Once you have begun finding client you will being to incur expenses on an ongoing basis as you run your business. Here are some of the ongoing expenses you which you should look out for as a self employed photographer and keep details of as they are generally tax allowable:
The cost of a business phone is an allowable expense however if there is personal use then only a proportion of the contract costs can be claimed.
If you have a ‘uniform’ with your branding that you wear while you photograph, then you should be able to claim for this cost. Normal clothing is not allowed!
Travel & Accommodation
Travelling is a common part of being a self employed photographer, so if you have incurred the costs of taking a train, staying in a hotel or taxis then be sure to ask for your receipt as you should be able to claim this as an allowable expense. If you do stay overnight in a hotel, incidental costs such as an evening meal may also be allowable but the cost should be reasonable!
If you have to use your car to travel to an event or wedding, then note down the mileage. This falls under the category of travel. So record you miles to and from your destination since you can claim 45p for the first 10,000 miles of driving and 25p thereafter.
Say you have a full day photography shoot and need to buy lunch you can expense reasonable meal costs such as lunch.
Use of Home
If you choose to base yourself at home then there are rules that will allow you to claim an amount for the running costs of doing so as a portion of your household bills such as gas, water, electricity or rent. Make sure you have an idea of your household running costs to discuss with your accountant at tax return time as they will help you work out how much you can claim against your taxable income.
Equipment doesn’t come cheap, so if you have taken out an insurance policy to cover loss or damage you will be able to claim this cost as an allowable expense.
Any marketing you do, paid ads or anyone you pay to help you with your marketing is also fully allowable so make sure you download or ask your marketing assistant to send you an invoice before you pay them.
Accounting & Bookkeeping
Keeping accurate business records will help to avoid missing any entitlements or tax relief that you may be eligible for. Using a cloud based accounting software such as Xero, Quickbooks or Sage will make life easier, so if you do choose to sign up the cost of the monthly subscription is fully tax allowable. Then, if you choose to use an accountant to complete your self assessment tax return, again their fees will be an allowable expense but keeping your business records in order will avoid any increases in fees.
It is advisable to open a business bank account and keep your business and personal expenditure separate. The bank charges you pay on your business bank account is an allowable expense.
Common disallowable expenses include:
Lunch – Unless you are working away at an event, unfortunately that bread roll and tomato soup you bought today while working from home is not an allowable expense.
Non business-related vehicle costs – Private use running costs such as fuel are not allowable. Keep a track of your personal/business usage to determine an accurate mileage claim. You do not want to underclaim or overclaim.
Costs of goods purchased for private use – Any item purchased solely for personal use is sadly not a business expense. It’s always worth asking one of our freelance accountants if you have any dual use items though, as some might be proportionately claimable.
Cost of ordinary clothing – General day-to-day clothing is not a claimable business expense. However if you wear a branded t shirt, with your logo, to events you are photographing, chances are you will be able to make a claim for this against your tax bill.
Entertaining clients or hospitality at events – That pub lunch you treated your prospective client to is unfortunately not claimable against your tax bill.