Tax Guide for Musicians: Self-Employment, Expenses & Self-Assessment UK (2025–26)

Being a musician is one of the most rewarding careers imaginable. It is also one of the most financially complex. Between gig fees, session work, merchandise, royalties, teaching, and the occasional PRS cheque, the income streams of a working musician rarely sit neatly in a single column. And HMRC expects you to report all of it.

This guide covers everything a self-employed musician needs to know about UK tax for 2025–26 — from registering with HMRC to claiming the right expenses and staying on the right side of the Self Assessment deadline. This is guidance only — always consult an accountant for advice specific to your circumstances.

---

Registering as Self-Employed

If your music income exceeds £1,000 in a tax year, you must register as self-employed with HMRC and file a Self Assessment return. The £1,000 figure is the Trading Allowance — a simple exemption for very small amounts of self-employed income. Once you exceed it, you need to register.

How to register:

1. Go to gov.uk/register-for-self-assessment
2. Set up a Government Gateway account if you don't have one
3. Complete the online registration form
4. HMRC will send your Unique Taxpayer Reference (UTR) within 10 working days

Register as soon as you start earning, not at the end of the tax year. HMRC expects you to register by 5 October following the end of the tax year in which you first earned. Miss this and you could face a penalty.

Most musicians operate as sole traders — the simplest structure. Some form a limited company once income grows significantly, but for most working musicians, sole trader status is perfectly adequate. Consult an accountant if you're unsure which structure suits you.

---

Understanding Your Tax Bill

As a self-employed musician, your tax is calculated on your profits — income minus allowable expenses — not your gross turnover. For 2025–26, the rates are:

On top of Income Tax, you'll also pay National Insurance Contributions (NICs) — see the National Insurance section below.

---

Allowable Expenses for Musicians

Expenses that are "wholly and exclusively" for your business reduce your taxable profit. Here are the main categories that apply to musicians:

Musical Equipment

• Instruments, bows, reeds, strings, drumheads, picks, and other consumables
• Amplifiers, pedals, DI boxes, in-ear monitors
• PA systems and mixing equipment
• Instrument cases, stands, and accessories
• Repair and maintenance of instruments

For larger purchases (e.g. a new guitar at £2,000), you claim through the Annual Investment Allowance (AIA), which allows you to deduct the full cost in the year of purchase rather than spreading it over several years.

Travel and Transport

• Mileage at HMRC's approved rate of 45p per mile for the first 10,000 miles (25p thereafter) if you use your personal vehicle
• Alternatively, claim actual vehicle costs if you keep detailed records
• Train, bus, and taxi fares to gigs
• Parking and road tolls
• Van hire for large equipment moves

You cannot claim the cost of commuting from home to a regular place of work, but musicians rarely have a fixed workplace — so most travel to gigs is deductible.

Venue Hire and Rehearsal Costs

• Rehearsal room hire
• Studio hire for recording demos or promo material
• Practice space rental

Professional Fees and Services

• Booking agent or manager commission (typically 10–20% of fees)
• Accountant fees
• Music lawyer fees (e.g. reviewing contracts)
• PRS for Music or Musicians' Union membership

Marketing and Promotion

• Website design and hosting
• EPK (electronic press kit) production
• Promotional photography
• Advertising on directories and booking platforms
• Business cards and printed materials
• Social media advertising

Music and Training

• Sheet music and scores purchased for professional use
• Online courses, workshops, and masterclasses related to your work
• Books and publications relevant to your craft

Clothing

• Stage costumes or uniforms that are not suitable for everyday wear
• Note: general smart clothing (e.g. a suit you wear to gigs) is not deductible, even if you only wear it for performances

Home Office

If you work from home (e.g. teaching students, doing admin, or producing music), you can claim a proportion of household costs — electricity, broadband, even rent if applicable — based on the number of rooms used for work and time spent.

---

Record Keeping

Good records are not optional. HMRC can request to see your records up to six years after the tax year in question, so keeping them organised from the start saves you significant pain later.

What to keep:

• All invoices you raise for gig fees, session work, and teaching
• All receipts for deductible expenses
• Bank statements showing business-related transactions
• Mileage logs (date, destination, purpose, miles)
• PRS statements and any royalty payments
• Contracts and booking confirmations

Many musicians find it easiest to use accounting software — FreeAgent, QuickBooks, or Xero are popular choices that integrate with your bank account and categorise transactions automatically. Even a well-maintained spreadsheet is better than a box of receipts.

Keep a separate bank account for music income and expenses. This is not legally required as a sole trader, but it makes bookkeeping dramatically simpler and reduces the risk of mixing personal and business finances.

---

Self Assessment: Filing Your Return

Every self-employed musician earning above the Personal Allowance must file a Self Assessment tax return. Even if you earn below £12,570, it is good practice to file if you have any self-employed income — you may be entitled to National Insurance credits.

Key dates:

• 5 April — end of the tax year
• 5 October — deadline to register for Self Assessment if new to self-employment
• 31 October — deadline for paper tax returns
• 31 January — deadline for online tax returns AND payment of any tax owed
• 31 July — deadline for second payment on account (if applicable)

Payments on account: If your tax bill exceeds £1,000, HMRC requires you to make advance payments towards the next year's bill. These are split into two instalments — 31 January and 31 July. This catches many musicians off guard in their first or second year. Budget for it.

Filing your return online via HMRC's Self Assessment portal is straightforward once you have your income and expense figures totalled. Your UTR and National Insurance number are required. Consider using an accountant for your first return — the fee is itself a deductible expense.

---

VAT for Musicians

For 2025–26, the VAT registration threshold is £90,000 in taxable turnover over any rolling 12-month period. Most solo musicians and small bands will comfortably stay below this. However, successful function bands, touring acts, or musicians who combine performance with production, teaching, or merchandise may approach the threshold.

If you are VAT registered:

• You charge 20% VAT on top of your fees
• You can reclaim VAT on business purchases (equipment, travel, etc.)
• You must file quarterly VAT returns via Making Tax Digital (MTD) compatible software

VAT on music can be complex — teaching is generally exempt, live performance is standard rated, but there are nuances. Consult an accountant if you are approaching the threshold.

---

National Insurance Contributions

As a self-employed musician, you pay two classes of NICs:

Class 2 NICs: £3.50 per week (2025–26). Voluntary if your profits are below £6,845 (Small Profits Threshold). If your profits are above this, Class 2 is paid automatically via Self Assessment. Paying Class 2 (even voluntarily) protects your entitlement to State Pension and contributory benefits.

Class 4 NICs:

• 6% on profits between £12,570 and £50,270
• 2% on profits above £50,270

Class 4 is calculated and paid via your Self Assessment return. Unlike Class 2, it does not count towards State Pension entitlement — it is purely a tax on profits.

---

Making Tax Digital (MTD)

From April 2026, Making Tax Digital for Income Tax will apply to self-employed individuals with income over £50,000. From April 2027, the threshold drops to £30,000.

MTD means you will need to:

• Use HMRC-compatible software to keep digital records
• Submit quarterly income and expense summaries to HMRC
• File a final annual return at year end

If you are approaching these thresholds, act now. Choose MTD-compatible software (FreeAgent, QuickBooks, and Xero all qualify) and start keeping digital records. The adjustment is straightforward if you are already using accounting software — but a shock if you have been relying on spreadsheets or paper records.

---

Working Through an Agency or Label

If you work through a booking agency, they deduct their commission before paying you. Your taxable income is the gross fee, not the net amount after commission — but commission is a deductible expense. Keep records of all agency statements.

If you do any employed work alongside your self-employment (e.g. session work via a PAYE arrangement, or a day job), your tax-free Personal Allowance is shared across both sources of income. HMRC allocates it to your employment first. Make sure your tax code reflects this correctly.

---

Key Takeaways

• Register as self-employed with HMRC as soon as your music income exceeds £1,000
• Keep records of all income and expenses — instruments, travel, agents' commission, rehearsal hire, marketing
• File your Self Assessment return and pay any tax owed by 31 January
• Budget for National Insurance on top of Income Tax
• If income exceeds £50,000, prepare for Making Tax Digital from April 2026
• Consult an accountant — the cost is deductible and the peace of mind is worth it

---

List your musician services on FolkAir free → folkair.com/join