tax saving on equipment

[DaveCurley]

You may know this but I have had it confirmed that if you are attempting to sell your photos, then you can claim your photo equipment costs as a taxable expense, How do you prove that you are attempting to sell your photos, get a website set up, cost you £35 per annum. Nice to know the tax man wants me to take photos !

[Bawbee]

Re: tax saving on equipment

Would you not have to be working as a limited company or registered with HMRC as a sole trader, thereby leaving yourselfopen for VAT, regular inspections and all the other rigamarole that comes with it?

BTW - I have my own limited VAT registered company, although not photography related, I could consider side-lining to take advantage of your suggestion

[Optimus Prime]

Re: tax saving on equipment

you would need to register as self employed with the tax man, which would generate the requirement for an annual tax return to be completed, detailing "other earnings", they may become suspicious if you file nil returns year after year, and that you have no income from this side venture but you are claiming expenses.

you wouldn't need to be registered for VAT unless your turnover (not profit) was in excess of £68,000 per year.

As for you taking advantage of the suggestion and side lining, there is no need to sideline. I also have my own VAT registered LTD company, which has nothing to do with photography whatsoever. However, the camera and accessories were all a legitimate business expense to take pictures for our company literature / website etc., so claimed VAT back and tax relief on the purchase.

The camera is listed as a company asset, but crucially, it also suffers depreciation annually, which is also tax allowable, on paper it will be worthless in 3 - 4 years.

[DaveCurley]

Re: tax saving on equipment

Optimus Prime hit the nail on the head, I am already registered as self employed.

[KEITH H]

Re: tax saving on equipment

Optimus Prime hit the nail on the head, I am already registered as self employed.

Me too, my G11 is used for site progress shots and is a 'company' asset, the EOS kit is not used for work and hence has not been subject to VAT reclaim or depreciation.

It should be remembered that equipment and other costs from a number of previous years (check with HMRC) can be offset against a new business in the first year of trading. Keep all those receipts safe, you never know.

[Woolley]

Re: tax saving on equipment

Optimus Prime hit the nail on the head, I am already registered as self employed.

Yes, but to convince the taxman, your photo sales must form a reasonable amount of your income. And they will check...

[JeffH]

Re: tax saving on equipment

In order to claim Capital Allowances on your equipment and for other expenses related to your photography work (as opposed to hobby) you do need to be registered with HMRC as a self-employed photographer and to complete annual Self Assessment Tax Returns. If your photography work results in losses (because your allowable expenses and the Capital Allowances on your equipment exceed your income from sales, etc) then, if challenged, you will need to be able to demonstrate that your photographic activities are being carried on "...on a commercial basis and with a view to the realisation of profit..." - ie. you are trading as a photographer, and simply having a website won't necessarily be sufficient to prove this.
You don't have to trade through a limited company and you don't have to register for VAT unless your turnover reaches the registration threshold.
Oh and if/when you stop "trading" (or the taxman decides you never really were!) then some/all of the Capital Allowances you've claimed on your equipment may well be reclaimed and you'll get a tax bill.
So do be very careful about going down this route unless you're fairly sure that at some stage you'll show a profit!

Jeff (former HM Tax Inspector and retired tax lawyer)

[DaveCurley]

Re: tax saving on equipment

JeffH, Thanks for your input and I stand corrected, though my understanding is that having declared yourself self employed, you can have a number of income streams and as a result, in the scheme of things it would be your overall income and expenditure that detirmines whether HMRC would question capital expenditure. If it not the case can you suggest what a semi profesional photographer can do to ensure tax breaks on their equipment ?

[Woolley]

Re: tax saving on equipment

1) sell enough to prove that it's a significant income stream
2) give evidence that it's vital to your revenue in another way - an estate agent photographing houses or perhaps you hire out a studio
3) don't have any other income, so that if you're not making huge amounts from it, it's clear that you're trying to and that it's not just a hobby with occasional income as a sideline.

It's the same as owning a van because you like vans and trying to claim tax relief because it's possible to carry a parcel in it. If it's not a required tool of your trade then it's not relevant as a deduction from your income.

[captureasecond]

Re: tax saving on equipment

The main thing that the tax people will look at is whether you are "attempting to sell", or "selling" photos. You need to show a track record of actually selling quite a few copies. My website started off as a hobby, just selling digital images, e-mailed to people after they paid £1 via Paypal. It generated quite a bit of other sales after people wanted larger images as well. That has been enough to allow me to set up the company formally and start to purchase other required items (CANON 400mm F2.8 lens, etc!), and get the clearance from my accountant that claiming the expenses and tax is allowable. You need to be proportional with sales and expences/ claims. No point showing £50 of sales and £2000 expences as someone will question it.

If you have a look around, some banks are giving out free business accounts that give free business banking for 2 years, along with a company credit card. That may make you decide to turn your hobby into a business.

I've a friend who teaches swimming lessons on a part time basis. They only make about £500 per year from it as it is just an interest they have, but they can claim motor milage for journeys to and from the swimming pool, essential "uniform" (budgie smugglers!), telephone calls to organise lessons, etc

The rule of thumb is not to claim more than you make after the first couple of years or people higher up the chain may take quite an interest... If you think about the losses most companies have in the first few years whilst establishing themselves, it is seen as acceptable.

[Trevoreast]

Re: tax saving on equipment

I agree that it would be best if the OP consulted his accountant, or sought advice from HMRC.
You can discuss hypothetical scenarios with the HMRC helpline without identifying yourself or company.

Trev