What is different about tax for musicians
A working musician's income rarely arrives in one form. Gig fees, session work, teaching, merchandise, streaming money through a distributor, sync fees and royalties can all land in the same month, some paid promptly, some a year after the work was done. Each stream has to be recorded, and a few have their own rules for VAT or overseas tax.
For tax, most musicians are self-employed. HMRC's guidance for performers applies to musicians and singers, and it says players paid separately for each performance, who can choose whether to accept the work, are normally self-employed for tax and National Insurance. That includes most orchestral players on "first call" or "guarantee" contracts. A musician paid a regular salary by an orchestra is likely to be an employee, taxed through PAYE.
Royalties: PRS for Music and PPL
Two UK collecting societies pay most musicians' royalties. PRS for Music represents songwriters, composers and music publishers, and pays when their compositions are streamed, downloaded, broadcast, performed live or played in public. PPL collects and pays royalties to performers and recording rights holders for the use of recorded music. If you write and record your own music you may be paid by both, as well as by a distributor for streams and downloads.
Royalties from your music work are part of your business income. Under the cash basis you include them in the tax year you receive them, whenever the song was played. Keep every statement, because they show which payments have had foreign tax deducted.
Sole trader, band partnership or limited company
Most solo musicians work as sole traders. A band that shares the profits from its gigs is often a partnership: the band registers with HMRC through a nominated partner, sends a partnership tax return, and each member pays tax on their own share through their own Self Assessment return. Some established artists, producers and songwriters use a limited company, which pays Corporation Tax at 19% to 25% and pays out dividends taxed at 10.75% or 35.75% for most people from 6 April 2026.
Worked example: a self-employed musician in 2026/27
Alex lives in England and uses the cash basis. In 2026/27 Alex receives £21,000 in gig fees, £7,000 for session work, £4,500 from teaching, £3,500 in PRS and PPL royalties and £1,000 from merchandise, and has no other income.
| Step | Working | Amount |
|---|---|---|
| Total income | £21,000 + £7,000 + £4,500 + £3,500 + £1,000 | £37,000.00 |
| New stage keyboard | Deducted in full under the cash basis | £2,400.00 |
| Travel to gigs and sessions | £2,100.00 | |
| Rehearsal space and studio hire | £1,300.00 | |
| Merchandise stock | £500.00 | |
| Strings, repairs, instrument insurance and memberships | £700.00 | |
| Taxable profit | £37,000 minus £7,000 of expenses | £30,000.00 |
| Income Tax | (£30,000 minus £12,570) x 20% = £17,430 x 20% | £3,486.00 |
| Class 4 National Insurance | £17,430 x 6% | £1,045.80 |
| Total tax and National Insurance | £3,486.00 plus £1,045.80 | £4,531.80 |
Because Alex's profit is above £7,105, Class 2 National Insurance is treated as paid for State Pension purposes at no extra cost. Income Tax bands are different in Scotland. To compare structures with your own numbers, try our sole trader vs limited company calculator.
Instruments, equipment and capital allowances
How you claim for instruments, amps, microphones, interfaces and recording gear depends on your accounting method:
- Cash basis (the default for sole traders and partnerships since 2024/25): equipment you buy to keep and use in the business is an ordinary allowable expense in the year you pay for it, as in Alex's example. Cars are the exception and go through capital allowances.
- Traditional accounting (compulsory for limited companies): equipment qualifies for capital allowances. The Annual Investment Allowance lets you deduct the full cost of most plant and machinery, up to £1 million a year.
Two rules catch musicians out. You cannot claim the Annual Investment Allowance on items you owned for another reason before you used them in the business, such as the guitar you had before going professional; writing down allowances apply instead. And if you also use equipment for personal playing, you reduce the claim for that private use. Our guide to capital allowances explains the options.
Allowable expenses for musicians
| Cost | Allowable? | Notes |
|---|---|---|
| Instruments, amps, recording and live equipment | Yes | Expense under the cash basis, capital allowances otherwise. Reduce for personal use. |
| Strings, reeds, repairs and servicing | Yes | Day to day running costs. |
| Rehearsal rooms, studio time, session players and engineers | Yes | Including producers and other freelancers you pay. |
| Manager and agent commission | Yes | Record the gross fee as income and the commission as a cost. |
| Travel to gigs, sessions and tours | Yes | Not ordinary commuting to a regular workplace. Hotels and meals on overnight trips are allowable. |
| Mileage | Yes | Simplified rate for 2026/27: 55p a mile for the first 10,000 business miles, 25p after. |
| Instrument and public liability insurance | Yes | Business insurance policies are allowable. |
| Musicians' Union and professional memberships | Yes | Where the membership relates to your work. |
| Marketing, website, distribution fees | Yes | Including paid promotion of releases. |
| Stage costume | Yes | Costume for performers is allowable. Everyday clothes are not, even if only worn on stage. |
| Home studio or practice room | Business share | Flat rate of £10, £18 or £26 a month by hours worked, or a reasonable share of actual costs. |
VAT for musicians
You must register for VAT when your taxable turnover passes £90,000 in a rolling 12 months, or if you expect to pass it in the next 30 days alone. A few music-specific points affect that total:
- Performing for a promoter or business based overseas is generally outside the scope of UK VAT under the business to business rule, and out of scope income does not count towards the threshold.
- Performing for private customers, such as a wedding or party, is taxed where the performance takes place.
- Music lessons you give personally, one-to-one or in groups, as a sole trader or partner, can be exempt from VAT when the subject is ordinarily taught in schools. Lessons delivered by someone you employ, or sold through your limited company, are not covered. Exempt income does not count towards the threshold.
The Flat Rate Scheme rate for entertainment is 12.5%, rising to 16.5% if you spend very little on goods, so compare it with the standard scheme before joining. See our VAT registration guide.
Touring, overseas income and uneven years
If you tour abroad or receive royalties from overseas societies, tax is sometimes deducted before the money reaches you. As a UK resident you still declare the full income, and you can usually claim Foreign Tax Credit Relief against the UK tax on it. The amount depends on the double taxation agreement with that country, and you get less back if the foreign rate was higher than the UK rate. Income paid in other currencies needs converting to sterling.
Songwriters and composers whose profits come mainly from their own musical works can claim averaging relief when profits swing sharply between two consecutive years, broadly where one year's profit is less than 75% of the other's. It spreads the profit evenly across both years, which helps if a big royalty year pushes you into higher rate tax. The relief does not apply to income from performing and cannot be used with the cash basis.
Key deadlines for 2026/27
| Date | What is due |
|---|---|
| 7 August 2026, 7 November 2026, 7 February 2027, 7 May 2027 | MTD for Income Tax quarterly updates, if your 2024/25 self-employment and property income before expenses was over £50,000 |
| 5 October 2026 | Register for Self Assessment if you started self-employment in 2025/26 |
| 31 January 2027 | File your 2025/26 return online, pay the balance and your first payment on account for 2026/27 |
| 6 April 2027 | MTD starts for those with qualifying income over £30,000 in 2025/26 |
| 31 July 2027 | Second payment on account for 2026/27 |
Partnership income does not count towards the MTD threshold, but income from your own solo work does. Read more in our guide to MTD for Income Tax.
How GoForma helps musicians
GoForma is an online accountancy practice working with clients across the UK by phone, video, email and WhatsApp. Our accountants are ACCA and AAT qualified, and FreeAgent accounting software is included in every package, so gig fees, royalty statements and receipts can go in as they arrive.
- Lite Sole Trader, £22 a month plus VAT, if you turn over less than £20,000 and keep your own books.
- Start Sole Trader, £44 a month plus VAT with 50% off for the first 3 months, with a dedicated accountant and your Self Assessment return.
- Start Sole Trader + MTD or + VAT, £68 a month plus VAT each.
- Start Bundle, £88 a month plus VAT, for a limited company including year-end accounts and payroll for one director.
Compare packages, see how we work with other creatives, or book a free consultation.