Tax breaks for artists and creatives

Understanding tax-deductible expenses

One of the most important tax breaks for artists is the ability to deduct business expenses related to your work. These deductions can include:

• Supplies and materials: Paints, canvases, musical instruments, and other materials you need for your art.

• Home studio: If you work from home, a portion of your rent or mortgage, utilities, and insurance may be deductible.

• Travel expenses: Costs associated with traveling to exhibits, performances, or business meetings can be deducted.

• Professional services: Fees paid to accountants, agents, or legal services are also deductible.

The key is to keep meticulous records of all these expenses throughout the year. This way, you can maximise your deductions and reduce your taxable income.

The Artist's resale right (ARR)

The Artist's Resale Right entitles creators to a royalty whenever their work is resold through an auction house or gallery. While this isn’t a direct tax break, the ARR is important to keep in mind when filing your taxes, as any income from these royalties must be declared. However, the costs associated with producing these works can offset this income, potentially lowering your tax burden.

Self-employment tax deductions

Most artists and creatives are self-employed, which means you’re responsible for paying self-employment taxes, which cover Social Security and Medicare. Fortunately, you can deduct half of these taxes on your income tax return, which can reduce your overall taxable income.

Grants and Fellowships

If you’ve received a grant or fellowship, you might be able to exclude some or all of this income from your taxes. The specific tax treatment depends on the terms of the grant and how the funds are used. For example, grants used to pay for research, supplies, or other direct costs of your creative projects are often tax-exempt.

Capital gains on art sales

If you sell your artwork, the profit (if any) might be subject to capital gains tax. However, if the art was held for more than a year, it might qualify for long-term capital gains tax rates, which are lower than ordinary income tax rates. Understanding these rules can help you plan your sales strategically to minimise taxes.

Making the most of retirement contributions

As a self-employed artist, you have several options for retirement savings that come with tax benefits, such as a Simplified Employee Pension (SEP) IRA or a Solo 401(k). Contributions to these accounts are tax-deductible and can help lower your taxable income.

Claiming the creative industry relief

In the UK, the Creative Industry Tax Relief (CITR) is a group of tax reliefs that encourage investment in creative sectors like film, animation, and video games. If your work falls into one of these categories, you could be eligible for a significant tax break. The CITR allows for a higher deduction of qualifying expenses, which can greatly reduce your taxable income.

Simplify your tax filing with our service

Navigating the complexities of tax breaks for artists and creatives can be overwhelming. That’s why we’ve created a service to make filing your self-assessment easy and straightforward. For just £9.99, fill out our simple questionnaire, and you’ll receive a personalised, step-by-step guide tailored to your unique tax situation. This affordable service ensures that you claim every tax break you’re entitled to, saving you time and money.

Tax season doesn’t have to be stressful, especially when you’re aware of the tax breaks available to you as an artist or creative professional. By keeping detailed records and staying informed about deductions and reliefs, you can significantly reduce your tax burden and keep more money in your pocket.

Let us help you navigate the process. Our tailored self-assessment guide is designed to make tax filing as painless as possible, so you can focus on what you do best—creating.