talkmagic.co.uk

As a newly self-employed magician I'd be interested to know which expenses are allowable for tax purposes. I'm seeing an accountant shortly but it would be good to have a general idea first.

Does it cover all props, down to individual packs of cards? What about books/DVDs related to magic? Smart clothing for posh functions? Petrol and reasonable travel costs? Website design, advertising, business cards? How about training sessions with other magicians, cost of attending conventions like Blackpool, travel to dealer days and so on?

If you prefer to PM me about this rather than reply here then feel free. Any help/advice/info much appreciated - cheers!

I'm not a magic pro, but I am a long-term freelance, so I think I can answer.

Basically it's a "yes" to everything you listed. Any expense related to a business can and should be deducted, including actual materials and props, advertising, travel, training, reference works, etc. Smart suits count as long as you wear them only when performing, in which case they're essentially your work gear.

Before going self-employed, you should be very aware of how to run a business, both the legal/tax aspects and the general knowledge of how to do admin chores smoothly and well. Get to your library and read as much as you can on the subject. (I suspect more self-employed businesses fail on this score than for any other reason. Admin sounds easy until it's up to you to do it!)

You need to discuss what you can fully claim on tax and what classes as capitol. As a rule of thumb, if it doesnt need replacing, its capitol, and you can claim 25% of it back each year - if it will ware out and needs replacing (decks of cards, rope, flash paper etc) then you can claim the full amount back on tax.

Perishables - flash paper, mouth coils, balloons, decks of cards - you can claim for. Lasting equipment - illusions, computer to run your business, van, etc, you claim one seventh depreciation each year until the end of seven years.
Petrol expenses and all motoring expenses you keep a note of and claim in full. Do not give yourself a milage rate - that only applies to civil servants. Keep a note of real expenses instead - down to oil changes and tyres.
One seventh the value of your vehicle each year in depreciation if it is used solely for your business. If it is used half for business, half for personal use, depreciation on half the value of the vehicle.
If using your house for running your business (most of us do) what percentage of your phone use is business related? Claim that. For me it is seventy to eighty percent. What portion of your electricity and heating bills is related to a home office? For me a lot less than 70%, but still place a value on it.
Car insurance and tax - again, in proportion to the business to personal ratio.
Claim for grooming (haircuts, shaving products) and for dry cleaning and maintenance of costumes. All advertising, all mail shots, business cards, etc. Attendance at conferences such as the IBM, membership of professional organisations such as Magic Circle or Equity, etc. Claim for all these.
In Ireland entertainment is VAT exempt. I am not sure about the UK. Check it out. VAT returns are a pain.
You can also claim your accountant expenses, which is nice.
Also check what allowances are available. As a part-time journalist I can claim £300 a year for newspapers and magazines. I spend it on good thrillers.
As long as you make an effort to be honest Revenue are easy to deal with. They are only nasty to the cowboys. As long as you are legit you will have no problems with them.

Robbie wrote:I'm not a magic pro, but I am a long-term freelance, so I think I can answer.

Basically it's a "yes" to everything you listed. Any expense related to a business can and should be deducted, including actual materials and props, advertising, travel, training, reference works, etc. Smart suits count as long as you wear them only when performing, in which case they're essentially your work gear.

Before going self-employed, you should be very aware of how to run a business, both the legal/tax aspects and the general knowledge of how to do admin chores smoothly and well. Get to your library and read as much as you can on the subject. (I suspect more self-employed businesses fail on this score than for any other reason. Admin sounds easy until it's up to you to do it!)

Most magicians fail not because they are poor magicians, but because they are poor business people. If you are seriously going to stake the way you live your life, your futur, your family etc, on becoming a magician full time then you need a business plan, a financial advisor, (if you are not good at such things). You need to know about taxes and insurance. And I'm not just talking about asking faceless people on the internet. You need long term financial goals written out, otherwise how do you know what to charge? Is charging 250 dollars for a 45 minute show going to get you where you need to be when you retire? Are you going to stick with parties or are you aiming for cruiships, Vegas baby, tv, magic conventions, lectures? If so what steps are you taking to reach these goals?

It sounds like a lot, and in a sense it is, some will come with time, but you have got to have a plan. What I find almost funny is that a lot of magic shops start up because a person loves magic, spends tons of money on magic, but just can't seem to make it as a full time pro, what is the next best thing? They open a magic store, they are doomed to fail because the same reason they failed as a magician is why the magic shop will fail. Sadly most shops fail within a year, most (successful) shops fail withing 3 yrs, and the precious few stick around for decades! And non of it has to do with magic, or performing magic, it has to do with business.

Just thought I would throw that out there, it is not all directed at you.

Thanks for all the info guys - very helpful.

TonyB wrote:In Ireland entertainment is VAT exempt. I am not sure about the UK. Check it out. VAT returns are a pain.

In the UK, you aren't required to register for VAT unless your business turnover is more than £70,000 a year. You're allowed to register for VAT no matter what your turnover, but this is really only useful for small businesses that use a lot of raw materials and would be better off passing the VAT on to customers. Otherwise you simply absorb the VAT as part of your running costs.

Speaking of taxes, the most important thing you absolutely must do, very first thing, is to register as self-employed with HM Revenue & Customs (Inland Revenue as was). This is the only legal requirement for new self-employees, but it's a vital one because it affects your National Insurance payments.

Here's the Business Link site about starting up. It has some good advice.
http://www.businesslink.gov.uk/bdotg/ac ... 1073858805

And here's the tax information site.
http://www.hmrc.gov.uk/startingup/

There's some info on an old post at http://www.talkmagic.co.uk/ftopic1989.php - might be useful.

Robbie wrote:Speaking of taxes, the most important thing you absolutely must do, very first thing, is to register as self-employed with HM Revenue & Customs (Inland Revenue as was). This is the only legal requirement for new self-employees, but it's a vital one because it affects your National Insurance payments.

Yeah you are right. I did that a few months back - set up as sole trader and got a direct debit to pay the Class 2 NI contributions. I'm doing a mix of magic in the evening (pub, clubs, restaurants, parties) and hypnotherapy (mainly stop smoking) during the day. It's great to be your own boss!

Hee. The Class 2s are nothing... it's the Class 4s that they wallop you with at income tax time! Ouch.

I'm restricted for legal purposes for answering the question directly but some of the advice given so far is 97% solid gold.

I would very strongly reccomend you call the HMRC (HM Revenue and Customs - Inland revenue as was) on this number: 0845 900 0444 and ask to speak to a technician with regards to allowable expenses. (be aware they are very busy and you normally have at least a 20 minute wait to get through )

Get it wrong and these are the people you will end up having to deal with anyway!

Meanwhile, as for ANY business, KEEP ALL YOUR RECEIPTS and stay on top of your personal accounts (dont just have a shoe box full of receipts, make a note of what they are for!)

Many things are allowable as an expense but certain items are not, it's always best to be safe rather than sorry.

Meanwhile all the very best in your career! I wish you every sucess!

The other option is to not pay tax. There is, after all, no lawful requirement to pay any tax. If you were so inclined (and I'm aware you may not be) you could write to HMRC conditionally accepting there offer to pay tax as long as they can demonstrate the following:

1) That you created, incurred, agreed or consented to the alleged liability.
2) That you have received benefits from public services as a direct result of moneys paid to HMRC.
3) That HMRC has the legal right to estimate the amount of your taxable income.
4) That you agreed to HMRC estimating the amount of your taxable income.
5) That all of your property is not private in nature and exempt from levy and third party lien of all kinds.
6) That not one penny of taxes previously paid to HMRC has not been spent on the murder of innocent men, women and children in the illegal occupations of Afghanistan and Iraq.

HMRC is a corporate entity, and as such they require your voluntary consent in order to have any authority over you. Also, taxes are not spent on public services but instead service the interest on the national debt (I think council tax is different in that that money is paid to the local council rather than going into the coffers of the exchequer).

My view is that it is unethical to pay taxes because of point 6 above, not to mention all the other abuses that have been carried out by our government against other countries and peoples. I personally don't see how anyone could support a system that systematically installs and arms dictators, invades other countries for their assets and lies to its population about its activities and consider themselves to be ethical or moral.

For an in-depth look at our foreign policy since the second world war then I suggest you read Web of Deceit by Mark Curtis. I should warn you, the book will probably make you very angry. It did me - it was instrumental in the cultivation of the disgust and contempt I now hold for those who allegedly represent and govern us.

Mike, please don't listen to Gary's views on tax, while I appreciate this is Gary's opinion and I would defend to the death his right to say it; following his advice could land you in jail.

Gary, please.... don't.

The only time you actually don't have to pay taxes is if you are unemployed and not making any money at all or still in High School. Other than that, most people who make a decent living doing anything are REQUIRED to pay taxes.

Lawrence wrote:Mike, please don't listen to Gary's views on tax, while I appreciate this is Gary's opinion and I would defend to the death his right to say it; following his advice could land you in jail.

Gary, please.... don't.

It wasn't advice, just an opinion (see my signature). It certainly isn't a route for those who are faint of heart, however I know of one gentleman who has used this method with HMRC and is down on their books as a non-taxpayer. It is worth pointing out that the gentleman in question is not employed, self employed or in receipt of benefits (don't ask me how he supports himself - I don't know!), a situation I will very soon be in. I intend to conditionally accept HMRC's offer to pay taxes. I have no intention of supporting a government that routinely engages in illegal wars and murders people for their resources.

I am aware that I have views that differ from most people on matters of law and economics, but that's ok isn't it? The world would be a boring place if we all thought and said the same thing.

Having said that, while I intend to express myself in any way I see fit (bearing in mind that I am not, as far as I am aware, acting unlawfully or outside of the rules of this forum) I would not advocate that anyone follow the course of action outlined above unless it is on the basis of their own extensive research and due diligence. As Lawrence quite rightly pointed out, if you allow the Government jurisdiction over you and you don't play by the rules they have set down then you incur the liabilities that come with the compelled benefits of that jurisdiction, including, but not limited to, potential jail time.