As a self-employed photographer, you have the absolute freedom to be your boss and make your own rules. You must have your equipment, commute on your own and have a mobile phone. Yet, you don’t get to enjoy paid holidays, sick leaves, and you could go days without earning if you don’t source work.
The cycle of continuously searching for jobs, working, following up payments – while looking for the next project can keep a self-employed photographer very busy. In addition to searching for projects, you are also responsible for filing taxes.
While taxation can be a complex subject to master, as a self-employed photographer, you need to know what forms to fill, allowable expenses to claim, and deadlines to abide by to avoid paying penalties.
This comprehensive tax guide is everything a self-employed photographer needs to get their taxes done on time. Let’s start this step-by-step guide by learning how to register with HMRC.
Registering With HMRC
Most self-employed photographers are under the wrong assumption that they aren’t required to pay income tax. As a freelance photographer, you would be required to register with HMRC and also declare your income.
If your income falls below personal allowances, then your income will not be taxed. However, you’ll still be required to declare your income to HMRC using the self-assessment tax return. Please note that if you can earn annual income up to £1000 tax-free and are not required to file tax returns.
Choosing the Right Form
If you need to file the taxes, you must fill and return the completed self-employed form to HMRC. You can access the forms at the Government publications website.
All the information required on the form is pretty straightforward – like name, address, and date of birth. You would also need to provide details such as the nature of your work, your address, and more. You should also give your National Insurance number.
Most of the registration can be done on the HMRC website. However, if you are using paper forms, you can find the address you need to send the filled-in forms to right on the form.
Always make sure to have a copy of the filled-in form and note the date you turned the form in.
Submitting the Tax Return
Once you turn in the completed form, you’ll receive a confirmation of registration from HMRC with your UTR or Unique Taxpayers Reference. You should mention this reference number in all your correspondence with HMRC.
If you are filing the returns by paper, you must submit the tax return to HMRC by 31 October by the end of the tax year. If filing the returns online, the last date to submit the returns is 31 January by the end of the year.
If you don’t file the returns by the deadline, you will be required to pay a fixed fine of £100 and additional penalties depending on how long you delay filing tax returns. Learn more on How to Complete Your First Self Assessment Tax Return
Paying Tax Due – if any
The tax due should be paid on or before 31 January after the end of the tax year. You can pay this tax amount to the HMRC in several ways – online banking, Bank Giro, Direct Debit, and more.
Additionally, even the income that has been taxed already should be included in the filing. The tax that’s paid at the source will be deducted before the tax due is finalised. Also, if your tax liability is more than £1000 or if the tax paid at source isn’t quite a lot, then you’ll have to provide an instalment for the following year’s tax by or on 31 January.
Most people maintain tax records only for a couple of years, which is certainly not advised. You’ll have to record and keep all the tax documents for at least six years in case the HMRC wants to review your tax files.
HMRC is not very particular about the type of record-keeping a self-employed person keeps. Initially, you can start by maintaining simple spreadsheets where you can record your income and expenditure. Or you could also choose a cash book for recording your finances. However, you would soon be able to figure out what format suits your needs best.
If you have other sources of income other than your freelancing work, you would be required to maintain a few more records. This is not an exhaustive list but only intended to let you have an idea about the kind of documents you might be required to maintain.
- Portfolio statements,
- Bank Interest certificates
- Receipts for Gift Aid Scheme donations
- Dividend vouchers
- Documents for assets sold such as land, shares, house, etc
- Documents for money paid for pension schemes
- Revenue statements for any income received for land or property
Claiming Business Expenses and Vehicle Running Costs
Again, these are some of the most common expenses that can be claimed:
- Studio rent
- Photographic products, Equipment
- Repairs and replacement products for equipment
- The computer used for work
- Photography courses attended
- Business Mobile phone
- Business landline phone
- Advertising, Internet, Wages
- Travelling expenses
- Parking fees and toll charges
- Maintenance and Repairs
- Cleaning Charges
- Vehicle Insurance
- Road Tax
- Capital Allowances
You can claim a 100% capital allowance for vehicles or any other assets you use for business purposes. You can also claim capital allowances for any other assets you’ve bought before starting your photography business, provided you use these assets for your business.
Note on Claiming Expenses
Using your Home for your Business
If you undertake your business activities from your home, you are entitled to claim a part of your home running costs. You could include expenses such as telephone, electricity, gas, internet, mortgage interest, rent, and more.
There are a few strict rules regarding the extent to which you can claim training costs for tax purposes if the training is meant for the proprietor.
Starting as a self-employed photographer and filling your first tax returns can be overwhelming for many. While it might seem easy to register yourself with HMRC, the entire process of filing tax returns can be complicated and daunting.
To make sure you file the returns on time and accurately, you should think about getting help from a tax advisor or an experienced accountant. In addition to being familiar with the filing, a qualified tax advisor will also be able to give you suggestions on tax savings, improving your financial standing, and enhancing your business contacts.