Daily Archives: 13/02/2017

The tax man giveth…

HM Revenue and Customs formDoing what you love for a living, it turns out, is not as straight forward as you’d think. I speak, of course, of the challenge of accounting to the tax man.

It’s true that said challenge is not pressing. I doubt even the most zealous official of Her Majesty’s Revenue and Customs is going to be knocking on my door demanding her cut of the £18.58 that is my current sum total of royalties. But great riches are surely only just around the corner! So in anticipation of those exciting times I’ve been endeavouring to do what all the websites say is crucial to successful self-employment: keeping records.

The trouble is, I can’t find many things to keep records of. It’s not like I have lists of orders, or a catalogue of stock, or receipts or invoices. I don’t have much in the way of costs (just as well, given I have even less in the way of income): communications with my agent are by email, I’ve yet to dip my toe in the self-publishing puddle, and I write everything on the same creaky laptop I’ve had for years.

I do, though, work from home, and those nice people at HMRC will apparently let me count some of the costs of maintaining it – utilities and council tax and so on – as business expenses. Hurrah! But in order to take advantage of this unexpected largesse, I need to find a justifiable way of identifying the proportion of those costs that fall to writing.

There’s apparently more than one way to do this. HMRC have a simplified calculation that will come up with an estimated cost for you – but I can’t help feeling that’s unlikely to err on the side of generosity. Or if you use one room primarily as an office, you can divide your costs by the total number of rooms in your house and use that. But do bathrooms count? And are my kitchen and dining room two separate rooms – there’s an archway between them instead of a door – or would the man/woman from the revenue claim them as a kitchen-diner? Perhaps I should get an estate agent round.

The alternative, as I understand it, is to record the amount of time you spend working- so if you spend 4 hours every day hard at it, say, you could claim a sixth of the costs of running your house as a business expense. All well and good, and keeping a timesheet appeals to the not-yet-completely-dead civil servant in me. Plus it will surely count as another one of those records I’m supposed to be keeping. Simples, no?

Well, no. Because now I have to decide what counts as working time. The bit where I’m actually sat at my laptop producing words seems fair enough. And ditto editing. But just how creative can we get here? Can I count reading “in genre” as research? What about out of genre? If I enjoyed reading something does it automatically become entertainment instead of research? And what about Twitter – surely a quick scroll through #amwriting is practically a requirement these days?

I remember reading once about lawyers getting grief for having billed their clients for time spent in the bath on the basis they were thinking about their cases. Their argument was that, like Archimedes, that might be when they got their Eureka! moments. It seemed like a load of old hollyhocks at the time, but I’m starting to feel more sympathetic…

It’s a minefield. Any advice gratefully received; and if you’d like to send it on the back of a £50 note, I’m reliably informed there’s no tax to pay on gifts.