I certainly get a lot of personal enjoyment from my job but does that mean any associated expenses should be disallowed?
Traditionally, questions have always been raised around the deductibility of business trips that include an element of holiday. Where one of the purposes of the expense was for personal reasons, none of the costs incurred are allowed as a tax deduction. If a definite part or proportion of an expense is wholly and exclusively laid out or expended for the purposes of the trade, an element of the expenses can be allowed. It is therefore vital that business costs can be split away from any personal benefit. In practice, this is much more difficult if the expense is incurred for business purposes but provides the business owner with a lot of personal gratification.
From the outside, influencers and performers seem to live in a dream world where travelling the globe, living a luxury lifestyle has been turned into a profession. The fact is that these are an incredibly hard working group of people and the work commitments are ruthless for those at all levels. More and more, people working in this industry are incurring expenses that HMRC are challenging on the basis of ‘duality of purpose’ meaning that the costs are incurred for partly a personal purpose. Take for example a trip to the Seychelles for a photo shoot or a shopping trip to Selfridges to vlog the last clothing haul.
HMRC’s guidance states that performers who claim cosmetic surgery to correct some perceived inadequacy in their appearance will need to prove that the expenditure has been incurred solely for professional purposes and that if one of the purposes was to gratify a private wish, no deduction will be allowed.
In the entertainment industry, there’s a huge variety of expenses that wouldn’t be incurred in other professions and we are always fielding an interesting array of suggested costs to deduct.
Self-employed vs employed
Only those who are self-employed or trading through a qualifying company can claim business expenses where they are wholly and exclusively performed in connection with the trade. For employees, the test is much more stringent as the costs must be incurred wholly, exclusively and necessarily by the taxpayer for the duties of their employment. Examples include professional subscriptions that medical professionals pay to be part of their mandatory associations or health and safety equipment/clothing that employees have to use as part of their job (where it is not provided by the employer).
Therefore any costs incurred by an employee that increase their chances for a successful career but that aren’t necessary to carry out their duties will not be allowed as a tax deduction, whereas such costs might be deductible for somebody who is self-employed.
For the self-employed trader, such as somebody who has an OnlyFans account, the costs they incur as part of their business will generally be deductible so long as one of the purposes of the expenses isn’t for personal reasons. In the example of cosmetic surgery, it might be necessary for the taxpayer to be able to argue that they were satisfied with their personal appearance prior to the surgery and that the only purpose for the change was to establish a more successful business.
The best action a performer can take is to check with their tax advisor before incurring any significant costs.
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