I am totally getting ahead of myself here, but as I have just subscribed to yet another magazine that might or might not publish one of my stories one day, it struck me.

Presumably what you earn on selling stories to magazines is taxable, but I could easily spend more than I earn just by buying magazines to research.
Would you have to be registered as a business to be able to deduct expenses like that?
Is that a normal way of handling it? What's common practice?

I haven't got a clue about these things. In Denmark where I'm from, you would have to be registered as a business, but the business license costs a bit of money in itself.
On the other hand you would be able to purchase a new laptop for your office tax free.

Any thoughts?


Nana

Nana, the best place for this kind of question is the Society of Authors: they have excellent leaflets which you can buy for a few pounds, and they'll advise members on the phone.

Society of Authors Publications

If the Inland Revenue accepts you as a freelance writer then yes, you can claim expenses like subscriptions - and many others, including business mileage, and a proportion of the cost of running your house - against your income. As far as I know you just have to tell the Revenue that you are doing freelance work. It was a good three years before my accountant said that I'd need to show some freelance earnings if I wanted the Revenue to go on accepting me as one. If your expenses are greater than your income from writing, then you can carry that loss over to the next year, and so on. Comes in handy for reducing the tax bill once you do start making a little profit.

Just for the record, though, technically prize money is taxable too, if you 'solicited' the prize; i.e. you entered the work yourself, rather than it being awarded from on high, or your publishers entering it for you.

Emma

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Re: the laptop, the rules about office hardware are slightly more complicated - I think you're only allowed to set a proportion of the price against tax in the first year, and more in the second. But it's still worth doing. Library fines, accountant's fees, coffee/food/hotels while you're reasearching away from home... It all adds up.

Authors tax affairs are an odd corner of the tax laws, though: many general books/accountants/helpful brothers-in-law don't know what they're talking about.

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Oh, and once you're in business, you can offset training costs too. Could be a way of easing the financial pain of paying for a Masters...

I assume the hardware rules revolve around tax depreciation for asset purchases. Ah, deferred tax liabilities. The joy of accountancy summed up in one ultra mundane subject.

Yes, though I think they changed and simplified them a couple of years ago. But it's still complicated. And don't get me started (no, don't, because I still don't understand it) on the special rules for averaging...

Emma

Thanks Emma. Will check the Authors website now )

Good idea about the Masters. I would love to take one and I hear that the Open University has one in the planning.

Nana