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Are royalties subject to class 4 national insurance?

Are royalties subject to class 4 national...

Client is artist and amongst her income she also receives royalties in respect of illustations used in books etc.

So that I can ensure the correct reporting can anyone advise whether these royalties are subject to class 4 nic? 


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09th Dec 2010 00:05

I don't know but...

I had a related question a few months ago under the title of "Dr Who music". My client is a retired musician who performed years ago for many famous films and also old Dr Who series. Although retired he still receives a royalty or similar payment when one of the films/Dr Who episodes is shown anywhere around the world. He receives about £2k a year from these performance rights. It takes me a couple of hours to collate the income figures. I have never deducted accountancy or other deductions and HMRC officer ( I don't even think he knew what a royalty was) said no deduction due.

I found the royalty tax rules complex. I came to the conclusion, rightly or wrongly, that a deduction for expenses is due if royalties are included within the accounts of an active profession. If the profession has ceased then I concluded that no deduction was due. But the one answer to my query mentioned above suggested that a deduction may in fact be due. I felt that it was not worth the risk of a claim but I would have appreciated a definitive response.

How does this relate to your query? I suspect that if royalties are included within the accounts for the profession then Class 4 NIC may be due. But it would be nice to have confirmation from an expert in this area. I couldn't find one at HMRC.

Sorry I couldn't be of more help.


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