I have just received a telephone call from my client who has written a book. (This is the first I knew about it today).
She has been offered £20K as an advance by a publisher against future royalties and sales by one of the big publishers. She is currently receiving benefits.
My thoughts are
1. Should she put this through a limited company?
2. How are the royalties taxed as a sole trader or as a company?
3. What effect has the fact she receive benefits on the whole situation.
I have lots of experience but very limited knowledge of royalties, if anyone as come across a similiar situation I would welcome your thoughts. Many thanks.
Andrew
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well
the advance has already been received IT when recived. she may well wish to average the advance as the gestation period issubstantial. this should not affect the NI
Try these bookmarks....
Take this link as a start http://www.hmrc.gov.uk/manuals/bimmanual/BIM50700.htm
I'm currently writing a book for a large publisher and have received a fee for writing and an advance on royalties.
£20k is a big advance on royalties and unless they expect to sell a huge number of copies quickly, may take her some time to claw back.
Does this advance include a fee for writing as well as an advance on royalties?
It may be her benefits would be better protected by taking a smaller advance and taking the money out on sales later.
The writing fee falls as income in the tax year and the royalties are averaged as they are usually only received twice a year.
You might also guide your client here for advice:
http://www.writersguild.org.uk/public/index.html