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Detailed List of Expenses

• Allowable Revenue Expenditure
• Capital Expenditure
• Overseas Expenditure

ALLOWABLE REVENUE EXPENDITURE

The Inspector of Taxes (HMRC) will allow revenue expenditure as a deduction from your freelance income when it is incurred wholly and exclusively for the purposes of your profession. The following is a list of the expenditure which HMIT will normally allow:-

1. Accountants Fees.
2. Advertising, Publicity, Brochures, Photographs.
3. Agents commission and complimentary tickets.
4. Auditions, Competition entry fees.
5. Books not retained for more than two years.
6. Bulbs, fuses, locks, keys, plugs, leads and minor repairs.
7. Coaching and rehearsals for engagements in hand.
8. Dental work beyond normal needs of health.
9. Deputies and accompanists (exclude deputies for an employment).
10. Dresswear
• Hire of professional dresswear.
• Laundering and dry cleaning of professional dresswear.
• Replacement cost of professional dresswear.
• Specific gig dresswear (at the behest of TV/ stage producer)
11. Fees paid to colleagues where the engager has paid their fees via you (your freelance income will include the gross fee).
12. Heat and light – calculate business use on area occupied.
13. Hire
• Business asset for less than two years.
• Rehearsal studio or performance venue.
• Tapes/ DVDs
14. Hotel accommodation on tour.
15. Instruments
• Insurance including part or contents policy, if appropriate.
• Overhauling, tuning, repairs and maintenance.
• Removal to another property.
• Strings or reeds, resin for bows and other instrument components.
16. Insurance including office and business property policies.
17. Interest and bank charges.
18. Journals and catalogues.
19. Legal costs including fee recovery and to fix contracts.
20. Manuscript paper and nibs.
21. Medical
• Alternative remedies including Shiatsu, acupuncture etc
• Chiropody.
• Throat spray and lozenges.
• Treatment for specific business purpose (no dual purpose) including osteopathy, physiotherapy.
22. Microfilming and printing up rare music including digital archiving.
23. Miscellaneous expenses – give a full description of each item and state why you are claiming it.
24. Motoring expenses (include motor cycle and/ or car), keep a log of the total and business mileage for each vehicle so that the business element can be calculated:-
• Breakdown subscription/ insurance.
• Car hire, petrol allowance to colleague(s).
• Car repairs, servicing, MOT, oils, antifreeze.
• Motor insurance.
• Parking at engagements, tolls and ferries.
• Petrol.
• Road Fund Licence.
25. Music for pupils, music for current engagements which you have not retained for more than two years.
26. Newspapers and Music Reports (only to read reviews or seek work).
27. Own property – calculate business percentage on floor area:-
• Cleaning.
• Insurance.
• Redecorating studio but only if you have private pupils in there.
• Rent and rates.
• Repairs and maintenance.
28. Photocopying.
29. Porterage, carriage, securicor, removals
30. Postage.
31. Private pupils exam fees and prizes.
32. Recording equipment.
• Batteries for radio/ cassette recorder/ calculator.
• Blank tapes/ CDs/ DVD for rehearsal.
• Demo discs/ tapes including cost of engineer to record them.
• Style and maintenance.
  
33. Records/ Tapes/ CDs/ DVDs not retained for more than two years.
34. Rent and rates of premises – calculate business percentage on floor area basis.
35. Replace tour luggage and toiletries.
36. Residential music festivals and conferences.
37. Research assistance and material.
38. Royalties to PRS.
39. Secretarial assistance including payments to spouse/ partner at the market rate for the work provided – normally to be paid through PAYE system.
40. Stage Appearance.
• Contact lenses and spectacles, maintenance insurance thereof (you must have second set of lenses or spectacles that you use outside work).
• Fitness costs if relate specifically to role.
• Hairdressing, Cosmetics, Beautician.
• Make up and remover.
41. Staff welfare including first aid and beverages.
42. Stationery.
43. Subscriptions to professional bodies.
44. Subsistence – you are allowed to claim the cost of all your meals when on overseas engagements. Only claim the cost of the evening meal when on tour in the UK.
45. Television – if much of your work is on stage:-
• Licence fee.
• Rental.
• Repair.
46. Telephone:-
• Land line – request call transaction listing from the line provider to calculate business amounts.
• Mobile.
• Coin box calls.
47. Tips including tips to dressers, call boys, stage doorkeepers.
48. Travel:-
• Bicycle repairs and maintenance, consumables and insurance – calculate the business use on a mileage basis.
• Fares to the engager.
• Fares to other than engager, e.g. music shops, libraries, auditions, festivals.
• Inoculations.
• Passport renewal.
• Travel cancellation fees.
• Travel insurance.
• Visas.
49. Visits to cinemas, concerts, opera, theatre, but only the cost of the ticket and only if akin to your repertoire.
50. Wardrobe expenses – replacement and renewal of existing items (including shoes and towels) and props.

CAPITAL EXPENDITURE

A deduction from your taxable income can be made in respect of your expenditure on “Fixed Assets” namely the movable tangibles likely to last over two years that are used in your business. The following are some examples:-

1. Anglepoise lamp/ dedicated lighting.
2. Bicycle.
3. Books including music reference books.
4. Calculator.
5. Camera, projector, screen.
6. Carrying case.
7. Computer and printer.
8. Fax machine.
9. Instrument and associated equipment.
10. Metronome.
11. Motorcycle.
12. Motor vehicle including car and van.
13. Music shelving.
14. Music stand.
15. Office furnishings including carpets and curtains.
16. Office furniture including desk, chair, filing cabinet and bookcase.
17. Piano stool/ seating for playing instrument.
18. Photocopier.
19. Recording and playing equipment including television (if much of your work is on stage), DVD, VCR, cassette recorder, Hi Fi and music centre.
20. Records, CDs/ DVDs and recorded tapes.
21. Scores and enduring music (lasts over two years).
22. Telephone including mobile phone.

Remember that when you commence your business that you can claim capital allowances on the “Fixed Assets” which you have introduced to the business even if you purchased an item several years before you commenced your business.

OVERSEAS EXPENDITURE

Expenditure on food and drink in the UK is not an allowable deduction from taxable earnings for income tax purposes as it does not meet the requirement that it has been incurred wholly and exclusively in connection with the business.  (There is a dual purpose in that one must eat to survive).  HMRC, by concession, will normally allow the cost of an evening meal, if it is accompanied by an overnight stay in the UK, while on a freelance engagement.

However, there is a statement of practice (SP) issued by the Inland Revenue, SPA16 which allows the whole of the cost of living expenses including accommodation, food and drink from taxable earnings which has been incurred while abroad on business purposes.  Private expenditure, for example, on holidays taken in the course of a business trip will not be allowed.

Valued Added Tax (VAT) on overseas expenditure.  The possibility of recovering VAT incurred on expenses in other European Community countries is often overlooked.  In accordance with the EC 8th directive, a VAT registered business in one EC country can make claims for VAT incurred elsewhere within the EC.  The following are required in order to make a claim:-

1. A claim form completed in the language of the country where the expenses were incurred.
2. A certificate confirming VAT registration in the European country of the claimant.
3. Original invoices.
4. The claim must be made within six months of the calendar year in which the expenses were incurred.  Unfortunately, there is an inordinate delay in processing the repayments by some countries especially Italy.  Claims are to be made on firms VAT65 and VAT66 which are obtainable from Customs and Excise.

Each EC country has different rules on the type of expense on which VAT can be recovered.  It is not cost-effective to seek refunds for small amounts of overseas VAT and each country has it’s own de-minimus amounts.

This material is published for the information of clients.  It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.