With rumours of a reduction in VAT gaining popularity (but still unlikely), I am urging performers to take a closer look at their earnings as the market recovers.
I am concerned that whilst performers are now starting to generate more work, some are not fully aware of how to properly account for this, especially as they approach the VAT threshold of £85,000.
Things have been taking off again in the West End and touring shows around the UK. Even understudies and deputies are getting more and more work, perhaps even MORE than pre-pandemic. However, where there’s growth, there’s tax. Especially for those who are creeping ever closer towards the VAT threshold again – maybe after they de-registered in the pandemic?’
Performers are playing “catch-up” after the last couple of years. They are squeezing more and more work into their schedules as best they can and who can blame them? The problem is, VAT is calculated on a rolling 12-month working period.
So if you’re back in the saddle, this is fab but work PRIOR to the theatres opening does actually need to be included in your sums too.
What I term the “Very Annoying Tax” (VAT) issue may become trickier still, with many performers having deregistered for VAT when work was dropping off a cliff.
As you get close to the threshold (£85,000 for anyone falling asleep at the back) you need to register for VAT and then start charging it. Now, you will need a VAT number for this which will be announced by HMRC and this is often by no means a swift process. If you are late registering for VAT, you may have to start going back several months and then “onward bill” any VAT. If this is the case, warn the production company, fixer or your agent.
This is all before we even factor in the impact of deping-out work and how that changes your VAT situation. When it comes to the VAT threshold, it is the total earned, not “made” that concerns our friends at HMRC.
The dep costs are a factor in your profits and self-assessment but not the threshold so be vigilant.
The least you need to know:
VAT is on GROSS fee income, before any expenses.
Look at it over 12 months rolling.
Work it out monthly and for heaven’s sake, register pronto!
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