Tax for Actors: Get Your Tax In Gear

Cut through the tax panic attacks with these tips for all freelancers...

By Matthew Jacobs Morgan

What with us still reeling from the self-assessment deadline in January (or, what I like to call anti-Christmas) and going into a new financial year in April (or, what I like to call sad-new-year) what better time to dig our heels in and talk about our finances?

It’s very hard to make taxes sexy. They’re boring, long and sometimes downright depressing, but paying taxes is one of the certainties in life.

I am still astounded by the fact that taxes are not taught in schools or colleges and baffled by the way we’re all expected to muddle through with HMRC ready to pounce at any moment if we mess up.

I am not an accountant. I am not a financial adviser. But I have been a freelancer for 10 years and have learned some lessons the hard way which I’d love to share with you. What with us still reeling from the self-assessment deadline in January (or, what I like to call anti-Christmas) and going into a new financial year in April (or, what I like to call sad-new-year) what better time to dig our heels in and talk about our finances?

As self-employed individuals, we have a lot of expenses to pay just in order to do our jobs. Travel expenses, classes, Spotlight Membership, headshots, showreel editing, accountancy fees, telephone bills, theatre and cinema tickets, sheet music and a whole array of other costs. DEDUCT THEM.

Do Them Early

So, I didn’t know this for years, but you can do your self-assessment as soon as the financial year ends. I used to wait until the January self-assessment deadline was approaching and frantically sift through coffee-stained receipts and delve back into bank statements that bring back awful memories (nobody needs reminding of that terrible date at Pizza Express last July), whereas I could’ve in fact figured out how much I owed 9 months beforehand and had a relatively stress-free January - we’re all broke from Christmas as it is! Even if you don’t have the dosh to pay them straight away, at least you’ll have an idea of the chunk of money that you’ll be having to pay by the time January comes around and you won’t have any surprises!

Deduct Expenses… Legitimately

As self-employed individuals, we have a lot of expenses to pay just in order to do our jobs. Travel expenses, classes, Spotlight Membership, headshots, showreel editing, accountancy fees, telephone bills, theatre and cinema tickets, sheet music and a whole array of other costs. DEDUCT THEM.

I used to be so reluctant to offset those expenses against my taxes for fear of being uncharitable by paying less taxes. But if they are legit expenses, this fear is unnecessary. You would never expect an office employee to go out and buy their own office supplies. You would never expect a doctor to go out and buy the medicine for their patients out of their own pocket. You would never expect a zoo employee to go out and buy chunks of meat to feed the lions out of their own paycheck (I could go on with ridiculous analogies but I’ll stop there). As long as we are paying our fair share of tax and national insurance, there’s really nothing to feel guilty about.

Excel In Life and in Spreadsheets

Make a spreadsheet of every single payslip you receive, as soon as you get it. By doing this as you go along, you won’t have the task of sitting down and compiling this information as one huge task. It’ll be broken down into small, manageable pieces.

Have a column for the amount you’ve been paid, a column for the commission you paid (this is a deductible expense too!), VAT on commission, and any PAYE and National Insurance which was already deducted. It’s so dry, so doing it over a long period of time beats having a hellish couple of weeks doing it intensely.

Have a Separate Savings Account

Every time you receive a payment, put at least 20% of it into a separate account, and don’t touch it… No really, even for those Celine Dion tickets… No really just because Barbra Streisand has announced that she’s headlining Hyde Park doesn’t give you reason to crack out those savings. By ring-fencing some money for your taxes, you won’t be stuck when it comes round to paying it, and you won’t be as tempted to dip into it when you’re feeling naughty!

Accountants Are Your Friends

For years I was doing my self assessment on my own, which was fine, but I ended up making a whole host of mistakes that I ended up asking my accountant to go back and fix. Getting an accountant takes so much stress off of your shoulders. If they’re specialised in working with actors or freelancers, they’ll have a wealth of knowledge on what you can/can’t deduct, when to become VAT registered and how to do so, potentially registering as a limited company (I still don’t know what that means, though) and how best to manage your finances. They’re also essential if you’re saving to buy a property - it’s pretty much impossible to get a mortgage without a proper accountant if you’re a freelancer, so invest the money in one if you can!

Paying Late

Now, this is a last resort, emergency situation. I had one year where I had an emergency in my flat which meant I had to dip into my tax money, and didn’t make it back in time for the self-assessment deadline.

I literally had sleepless nights, certain that I would be thrown in jail and blacklisted from ever being able to work again… the reality is, HMRC can do a payment plan for you which allows you to slowly pay off what you owe over a few months. On the phone, they tend to be bulldogs as it is of course their job to squeeze the money out of you if they can, however if you genuinely can’t pay it on time, they do have support systems in place to make sure you get it paid when you can.

Basically, taxes aren’t as stressful as they seem. The only way they become stressful is when you set yourself up to fail, which I’ve done so many times. If you’re honest, proactive and give yourself the gift of time, you’ll kick 'em in the tax.

Matthew Jacobs Morgan is an actor and filmmaker from London. His credits as an actor include Our Town (Almeida Theatre), Tommy (New Wolsey) and the TV series Cuffs, Wasted, Love Nina, Midsomer Murders and upcoming C4 Drama Pure. He has numerous TV series and films in development including Dylan & Gracie which is under option at Tiger Aspect and Vamping which is being developed on 4Screenwriting.

Image credit: Michael Shelford