Tax returns for actors – options: new HMRC guidance
Here comes tax-return-season again! If you’re a self-employed actor or creative industry worker (or any other kind of self-employed person, in fact) you only have until 31 January to file your 2021/22 tax return - and 31 January will be here basically as soon as you’ve washed up from Christmas dinner.
At the home of tax returns for actors, we particularly noticed a new piece of HMRC guidance which is worth your attention.
We are often asked if actors can or should do their own self-assessment tax returns, or if they need to engage an accountant to help.
Contrary to what you might expect, there’s no embarrassment for us in this question. It’s not like asking a barber if you should cut your own hair. For many people, “self-assessment” means what it says, and a good proportion of actors and creatives will be able to complete their tax return themselves.
This can be true even when you have a few doubts or questions about details here or there. There are excellent sources of free information, such as Equity’s tax guides for its members, and the wonderful Sans Drama website. You can even post us a Facebook or Instagram query and we are happy to point you in the right direction on claiming subsistence expenses, how much of your make-up products to allow, changes to the tax system coming in 2024, etc.
We still have plenty of clients to keep us from twiddling our thumbs, though, thank goodness! And this is because there are broadly three categories of creatives who really should engage an accountant, and who are probably costing themselves if they are doing a DIY job.
Higher-rate taxpayers – people earning more than £50K in the year. At this level, underestimated expenses are costing you more than it would cost you to hire an expert to get it right; while honest errors in your favour could work out very expensive if HMRC decide to have a second look. [This group should also probably be VAT-registered (in fact, the advantage of VAT registration to most actors kicks in well below the £50K level) and VAT-registered actors will almost always make a net saving overall by registering and using an accountant, rather than attempting DIY.]
People who have overseas earnings, for example from some filming or theatre overseas, or rental income from a holiday home overseas. It is extremely unlikely that you are getting this right if you are doing it on your own.
Those who just don’t fancy it! We’re all constructed differently, and while some people find the annual tax return a breeze, others hate it. If you fall into the latter group, there is no shame at all in getting some help. Whatever your level of income, very many of our clients find that we save them more than our fee by helping them plan their tax affairs better.
If you are going to work with an accountant, who should you choose? Er, well, we obviously only really have one answer to that; but you may also be interested to read that HMRC issued new guidance on 22 September 2022, in response to several complaints and challenges centred around accountancy firms run by unqualified personnel.
Presently, in the UK, there are several great firms which specialise in tax returns for actors and creative industry workers. All the good ones are run by fully-qualified accountants, and appear on Equity’s list of sector specialists. We, of course, fall into both those categories. You may well look further than us, but if you do – always go with a fully-qualified specialist.
Happy tax return season to all the theatre, TV and film community!