Sunday, June 22, 2008

Rendering Unto Caesar

The life of the writer is unceasingly glamorous: preparing for launch events and other personal appearances, when not wrestling with knotty problems of narrative strategy before honing exquisitely crafted prose to a sheen which dazzles peers and awes readers.

Since most of my regular visitors to :: Acquired Taste are writers themselves, I'm hard put to get away with this one. Writing involves, even at the best of times, a great deal of drudgery and frustration and this weekend I added a new string to this particular bow: tax returns. I know, I know, you don't come here to read about tax, but trust me, this is important (and, if you have a certain cast of mind, even interesting).

Most writers have a day job, on which they pay tax. In the UK, they don't have to be particularly well-remunerated to pay tax at the higher rate of 40%. This means that of any income you get from writing, 40% has to be paid over to the taxman (the alternative strategy of not declaring it has the disadvantage of being illegal). If, as a writer, you haven't taken steps to deal with your tax liability, you're probably paying more tax than you need to.

If you are pursuing writing as a profession, you are entitled to offset certain expenses incurred in the course of that profession against any income you make. Do you have a home office? If so, a proportion of your energy costs, council tax and mortgage interest may be tax deductible. Do you buy books? They can be tax deductible too. Is your writing income 'lumpy' from year to year? There are ways of averaging it out to make your tax liability stable across years too. If you can wangle it so that your writing expenses exceed your income, you may even get a tax rebate.

I must stress that this is not formal "financial advice". But if you are a writer with any sort of income from the hobby, it's in your interest to secure some professional advice on the subject. The Society of Authors can recommend a number of accountants who specialise in writers' tax affairs if you are a member.

Being serious about writing does not just involve diligence about your craft: it also means being serious about administrative matters which are more easily ignored. Paying attention to tax isn't glamorous and for most of us it's not fun either. But get it right and you might find your royalties stretch further than you imagined.

Normal service will be resumed in future posts...

11 comments:

Alis said...

Thanks for this, Tim. It's reminded me that, although the OH has done my tax for the last few years, we had decided that we needed to get an accountant who knew all the authors' wrinkles to do it once I start getting paid. Which should be September...
Hope you're getting excited about the launch of TDOTN?

David Isaak said...

Since my first checks arrived this year, I don't have to worry about this until 2009. But since I make a living as a freelance consultant, it's going to just be more of the same...

Is it true that writers live tax-free in Ireland?

Tim Stretton said...

David, in answer to your question - in certain circumstances, yes: the so-called "U2 Law":

http://tinyurl.com/6dd9ap

Akasha Savage said...

Hi Tim. thanks for visiting me on the Darkside!

You are right about My Cousin Rachel.
I love Rebecca, but I do think My Cousin Rachel beats it. I'm going to read Jamica Inn next...it's a book I've always meant to read, but never got round to. :)

Tim Stretton said...

Akasha, I remember reading Jamaica Inn when I was in the sixth form and describing it as "turgid melodrama". Unsurprisingly I've never re-read it...

I've always found her work variable in quality: The House on the Strand is another good one, and her short stories are always interesting.

David Isaak said...

Thanks for the link. Fascinating to read how the tax authorities approach such things. I'll run my next book through their evaluation of creative and artistic merit before I submit it.

By the way, I notice your publication date is US Independence Day. Wish my pub date had been greeted with coast-to-coast fireworks...

Aliya Whiteley said...

Hey, yes - 4 July is my Munchie's birthday! Maybe I should buy her a copy.

I have a long history of buying people presents that I actually want. I once bought my dad a Rick Astley album.

Tim Stretton said...

I am sure the book will be equally enjoyable for birthday-celebrating Munchies and firecracking rebels alike...

David Isaak said...

Based on past experience, it will be a miracle if your book arrives over here by the pub date (though it has happened...).

Glad to hear that Munchie is an All-American kid, though.

Swainson said...

I'm self employed and you have to watch out on claiming for working at home as an expense because IR will want tax if you sell your house as capital gains.

If in doubt get an accountant who specialises in your field, they know what you should be claiming or not.

Tim Stretton said...

Swainson - you're right about the potential for capital gains tax, and the need to consult a professional!

I've engaged an accountant specialising in this area so we'll see what transpires...