I've been teachng privately for years as a sideline to employment in school, but it was such a relatively small amount of work that although I declared the income on my tax return, I didn't bother claiming any expenses.

Now that I've retired from school I have a much larger clientele and one thing that has happened is that I have bought a lot more teaching materials.

I much prefer to lend them. I have not lost a single book this way as I keep a careful track of who has what, but it does make it easier if you decide to change books with a student, and I don't want to keep putting the burden on them to buy more - though some do. I won't buy them and sell them on because this now complicates matters.

The thing is, over 30 years ago, when I was hoping I was building a performing career, I was informed that sheet music and books were capital, and thus couldn't be directly deductible but had to be depreciated along with the rest of the capital equipment - so one copy of the St Matthew Passion for a performance was in the same status as my piano.

Is this actually the case, particularly with regard to piano teaching books? Or am I right in assuming I can list all the copies of Alfred and Piano Adventures and Piano Time that I have bought to lend out this year? I have spent ages looking through the hmrc site but I can't find this, and I know SOME of you will know!

(I have the figures - I just don't know where to put them)

Many thaks
Linda ff

Why do you need to know that? Surely that's a job for your accountant to do. I've no idea where anything goes. I just give all my bank statements and receipts to my accountant once a year and he does everything for me. If I wanted to do it all myself, I wouldn't have become a music teacher.

Because not all of us can afford to pay an accountant?

It sounds a perfectly reasonable query to me. Unfortunately I don't have the answer but I'm sure someone out there does...

I'm interested in the answer too - I just assumed that such things were allowable expenses for a teacher, and my accountant didn't tell me otherwise (I stopped using him after the first 2 years when he actually cost me money by sending my returns in late.. but that's another story).

I am not a tax accountant, but deducting expenses incurred exclusively for teaching seems reasonable to me.

Are you deducting a portion of your utility costs, too? I'm pretty sure I remember that being allowable from the dim and dusky memory of my tax exams!

Anyway, I would advise popping into your tax office, or phoning the HMR&C who I've always found to be quite helpful; and the advice is free!

Both seems to be possible, and under current legislation, it usually doesn't make any difference because you can write off 100% of capital allowances in the first year if you are under a certain threshold anyway.

HMRC has quite an extensive advice library for school teachers' and tutors' tax returns, also for books:
http://www.hmrc.gov.uk/manuals/eimanual/EIM36710.htm

I think it's unlikely that books are dealt with in a different way if you are self-employed. In the MU's tax advice sheet, books are usually not listed under capital allowances, and I tend to deduct them straightaway, unless it's a really expensive book of exceptional quality (e.g. hardback) I am likely to use for the next 50 years

Yes, anything you buy for teaching that you don't sell on to pupils is tax deductable. Including stationary, printer ink, staples, paperclips..
Plus a proportion of your utilities.
Not coffee u

I think that this last year IR changed the rules, at least for those with less than 30,000 pounds turnover using the short form for their tax return - don't know about the others. If that could be you, it's worth checking. I think - from memory - capital allowances only kicked in above a certain total amount. Bit garbled but hope it helps

But remember that the accountant's fee is a valid, tax-deductable expense, so less of your hard-earned money will go to the tax office. I'd much rather pay ?99 to my accountant than attempting to do it myself, probably making a total mess and ending up paying a huge tax bill.

Edit: how much tax would you pay on that ?99 anyway?

It depends on your earnings. ?99 is one heck of a lot for me to pay, when I can do it myself with the aid of a phone call or two to the tax office, and I've said before on another thread that it is really very simple to do (unless you have a more complicated set up than the average music teacher).

The above 2 paragraphs should have been the other way round sorry

I haven't checked yet if the amount has changed. It used to be ?15,000! So I never had to do anythng apart from say what I'd earned and what I'd spent. Of course they were free to contact me and ask me for a breakdown of this, and maybe they do spot checks, but I've never nbeen asked.I could have just made up figures, though I did my best to gewt them as accurate as I could. The on;y thing they needed separately was a capital depreciation figure and the way I've always done that has been to take the last year's residual fund, add anything new that I'd bought in the way of instruments or serious computer hardware, and claim 25% of that.

I did have an accountant for the first year, which was about 15 years ago (I was just doing private at that time) and I was told it would be worth it for the weight off my mind. This was before you could get things like Quicken, though. The one thing he did do right at the beginning was to look at my piano, my shelving, my electric keyboard and my initial stock of piano books, and produce a capital figure for all that, which is what the subsequent years' figures have all been based on. H e was terribly fussy about a few things that I didn't and still don't think mattered - I had two bank accounts because I'd had the Enterprise Allowance and I had to open a separate trading account to get that. Sometimes cheques were paid for private things off that account and sometimes business things off the personal account (depending on where there was more money, of if I wanted to make some sort of impression). I was completely above board and stuck red or blue dots on every single cheque stub to show whether I was claiming it off tax or not; it was perfectly simple to understand but he was very twitchy about whether the tax man would approve. I did try telling him that I didn't think the tax man gave a toss about which bank account I'd paid for these things out of as long as they were allowable,

Then I got Quicken and found I could work out my figures without having to explain to a chinless John Major soundalike (honestly) how many times a day I went to the loo. I found this more stressful than working out the figures myself. And he was only doing my accunts, I didn't realise he wasn;t actually doing the tax return as well until I started getting stroppy letters from them.

Been doing my own returns ever since. It's a week f scrabbling through loads of old envelopes to find where you put something SO safely since last year, and totting up figures on the computer for purchases and moeny in, and then you pay and that's it.

The only problem comes in that a couple of times I've earned just too little (in addition to the PAYE salary from school) to need to pay on account for the following year - nothing to pay - and then my figures show that I did earn more after all, so I get to pay twice, once for last year when they said "don't worry" and once for the coming year.

And what they call the years and which weeks of teaching and getting paid they actually refer to is a complete mystery to me. But the nice people on the other end of the phone are very helpful and don't treat you like an idiot.

All be over this time next week.

Dug out the 09/10 notes:
P1, "Who cannot use short tax return": self-employed and had annual turnover of ?68,000 or over (blimey - didn't notice it was that much, wish I came near!)

P9, Capital allowances. "Expenses should not include cost of buying/improving vehicles and equipment such as computers, furniture, tools of the trade ... instead ... you can claim ... capital allowances" (fair enough)
BUT
P11, Small pools allowance. "If the balance of either the main pool or the special rate pool after claiming Annual Investment Allowance, together with any balance carried forward ... less any amount ... from disposing of euqipment ... is ?1000 or less, you may claim that whole amount as a 'small pools allowance' instead of the 20% writing down allowance

Actually, accountant's fees are NOT tax deductable!

Oh yes they are

Quote from Inland Revenue website:

Allowable business expenses

accountancy charges
advertising
cleaning of business premises
difference between opening and closing stock (on accounts)
discounts allowed to customers
employees' wages before any deductions are made, including any wages payable to the domestic partner
employer's contributions to employees' pension scheme
employer's (secondary) Class 1 SS contributions
heating and lighting (but see DMG35104)
hire or rental costs (but not any capital or purchase elements - see DMG35104)
interest payable under a credit sale, a consumer credit agreement or a hire purchase agreement (but not the capital element of payments - see DMG35019)
legal fees associated with the business
payment in kind for work done for the business - the monetary value is allowable
rent and rates
stationery
stock purchases
sundries, sometimes called miscellaneous items, which are small in relation to total allowable expenses provided that the decision maker is satisfied that no non-allowable expenses, for example for business entertainment, are included
telephone, telex, fax etc (but see DMG35009)
transport excluding any home-to-work costs - see also DMG35009 if a vehicle is used partly for private purposes
VAT allowable (DMG31413).

It depends whether the charges are within the context of the business itself. If a part of your own personal tax return, on which you need to list all you've earned or gained from wherever, then they're not deductible.

I HATE the annual tax/accounts thing but I do it myself as it gives me the best and clearest insight to where my money comes from and where it is going to. When I went self-employed I got a lot of free advice from the tax office who were very helpful with leaflets and checklists for what to include, exclude and how to keep accounts in such a way that I could keep track of things (this was long before the days of laptops and easy personal accounting packages). I got an accountant friend to check things through for me the first couple of years and he pointed a few things that I could be claiming for that I'd missed and since then have been 'flying solo'.

And, yes, I add to my music library every year - not just new repertoire books but also a growing collection of school ensemble music and, gradually, a small reference library of teaching and general music books which I lend out to my students eg to help with programme notes.

Please can somebody explain what 'capital allowance' means?

PS - I've always claimed for books that I buy to lend and it wouldn't have occurred to me not to!

Capital allowances - rewriting from the notes, - are expenses such as buying/improving vehicles and equipment such as computers, furniture, tools of the trade ...

To cope with assigning items to expenses or capital allowances, I think of items put down as capital allowances as (substantial) things you buy for your business, still have at the end of the year (ie aren't consummable), but may have to replace at some time in the future (and may or may not depreciate).

It's not intuitive from the tax payer's point of view: Capital allowances mean that when you have to fork out a large amount of money for a major item, which makes a dent in your profits for that year, you can't get all the tax back that year either, which makes your financial situation worse. It may be more to do with IR getting a steady flow of tax from you.

I suppose the OP had an issue with books with a niggly IR person because she will still have them at the end of the year she has bought them. She might have got a different response from a different person.

[EDIT] HAS ANYONE A COMMENT TO MAKE ON THE SMALL POOLS ALLOWANCE, WHICH SEEMS TO HAVE SIMPLIFIED THINGS FOR THE FOLKS WITH SMALLER TURNOVERS?

I would put books down as an expense rather than on the capital side. However for a large item such as a quality instrument you will use for teaching and practising I believe you could use an Annual Investment Allowance. Do a search on the HMRC site to check the rules and limits but I believe this does do the job Listener would hope it to - ie take a chunk off your taxable earnings so you don't pay tax on that amount. The total you claim should reflect the proportion used for the business as opposed to the total value. For example if you buy a piano for ?4K but the family use it 30% of the time then I think you should claim ?2.8K as your AIA. Health warning:I'm not an expert, so do check!

Yes, I have been doing it for the last two tax years in a row now if I can remember it rightly, and it's quite straightforward. I reckon it will apply to most "average " music teachers in an "average" tax year, meaning that if you don't buy a more expensive instrument or a few really big items that fall under "capital allowances", you can usually write everything off in the first year, and I have consequently done so.

Edit: As I already said earlier, I agree with Hils on the matter: If it isn't a hugely expensive book, I tend to class my books as "consumable" (not that I eat them ) and not as capital allowances. If the rules apply to tutors, I don't see why they should be re-invented for private music teachers (s. HMRC link).

Joining the wagon slightly late here....

I do my accounts myself and find my tax return quite straightforward (until last year when they 'lost' me off their system but that's a different story). I turned to the MU with questions over expenses and actually in their handbook they list allowable items- all types of music is included so it goes straight onto my expenses list. It's always pretty scary to see the total amount of money I spend on music each year...