End of Year Tax Planning for Creatives: How to Utilise Your Allowances Before 5th April

If you’re a designer, filmmaker, musician, or an artist, the chances are that managing finances is not your forte. Tax year ends on the 5th April, so becoming familiar with tax allowances and reliefs is crucial. By implementing the right strategy, you can retain more of your hard-earned money and stave off unnecessary tax payments.

Why Does End-of-Year Tax Planning Matter for Creatives?

As independent workers, creatives seldom ever receive a salary. Whether you are a sole trader or a freelance worker, managing the ups and downs of payments, income, and deductions is certainly a lot more difficult. That is why tax planning is so important to help lessen the burden on your tax bill while using available reliefs and allowances. At Creative and Numbers, we deal with accounts specifically tailored towards the creative sector. We know the pain points you confront and prepared this list of tips to help you ease your woes before the tax year ends on 5th April.

1. Maximise Your Pension Contributions

Making pension contributions is managed in a way that it is one of the most tax efficient options of saving for the future. The government does offer a tax relief on contributions that are up to 100% of your income with a maximum cap of £60,000 a year.

● Basic rate taxpayers get a tax relief of 20%, hence for every £80 that you contribute

the government adds £20.

● Higher rate taxpayers (40%) get additional relief so for £100 contribution towards

the pension the actual cost is £60.

● Additional rate taxpayers (45%) contribute a top up of £55 to relief of the top

government of £45.

If you have not fully used your personal allowance, then you can gain relief for three years previous to the current tax year.

2. Take Advantage of ISAs For Tax Free Saving Account

You can save up to £20,000 annually in an Individual Savings Account (ISA), which offers tax-free income on withdrawals If you are 18 to 40, you can also open a Lifetime ISA (LISA) to save for retirement or a first home. You can contribute up to £4,000 per year until age 50, with the government adding a 25% bonus (up to £1,000 annually). Remember, LISA contributions count towards your overall £20,000 ISA limit for the 2024/25 tax year.

3. Capital Gains Tax (CGT) – Take advantage of your exemption

If you’ve sold your shares, artwork, or even real estate, other than your primary residence, you could be liable for Capital Gains Tax (CGT). You may be able to claim relief from any capital gains tax of up to £3000 for the tax year 2024/25. It is best to claim this before the 5th April, especially for ISA investments.

4. Claim Tax Relief on Business Expenses

Claiming the grant doesn’t just mean receiving the portion of relief available. Many people, particularly in the creative industry, fail to claim tax relief. In fact, you can claim for the following:

● Rent for studio space or office space

● Film supplies, art materials, or even subscription-based software

● Meeting and exhibition travel expenses (But not commuting)

● Advertising and marketing, as well as any work on your website or even registration to a professional body

If you use the house as your workplace, you can also submit a claim for a partial amount of the expenses for the household, which ranges from electricity to internet. Be sure to include them in case you have not claimed them already.

5. Creative Business and Its VAT Challenges

You need to register for Value Added Tax (VAT) after your turnover reaches £90,000. This could prove useful, especially if your business has capital intensive purchases, as you will be able to reclaim VAT. However, if most of your customers are individuals or businesses that do not register for VAT, then bringing your business into the VAT system might not be beneficial. Consult with an accountant to assist you in making this decision.

6. Gaps in National Insurance Contributions NICS – Have a Look Everywhere

To qualify for the full State Pension, you must possess 35 years of National Insurance

Contributions (NICs). For individuals with some gaps due to lower earnings, illness, or having to care for children, there is the option of voluntary contributions. Currently, these contributions can be backdated to 2006, but that window closes on 5th April.

7. Work-Related Expenses: A Dive into What You can Claim

As either a self-employed creative or someone employed under PAYE, you are entitled to tax relief for unreimbursed work-related expenses like:

● Professional memberships fees

● Work related training

● Repair and maintenance costs for tools and uniforms

For anyone making less than £2,500 per year, you can claim via Self-Assessment tax return or fill out form P87.

Why Work with Accountants for Creatives

That tax season is creeping up, and if you’re like most people, it’s the absolute last thing you want to think about. Most likely, your attention is on completing your creative work in the allocated time. That’s where we step in. At Creative and Numbers, we specialise in accounting for creatives as we help you reduce your tax liability while improving your overall financial wellbeing.

Don’t Be Late – Before The 5 th April!

If you want to take advantage of any unused tax allowances before the end of the tax year, now is your time to act. Our team is more than ready to assist you with your VAT registration, expense claims, or even pension contributions. You’re invited to let us do the heavy lifting, and we’ll allow you to do what you truly enjoy!

Reach out to Creative and Numbers.