National Insurance on Music Royalties?

Need advice/pointing in the right direction

Didn't find your answer?

Hi,

A client of ours does some self-employment music work throughout the year but these profits are below both the Class 2 and Class 4 NIC thresholds. So far, no problems.

In 16/17 he received some £40,000 re PRS royalty income. 

My question's are:

1. Is this PRS income liable to both Class 2 and Class 4?

2. If so then surely it needs to be disclosed on his 16/17 self-employment pages in order for 3rd party software to calculate the relevant liabilities? I understand royalty income is usually disclosed as 'Other Income'.

If someone could point me towards some HMRC guidance/legislation it would be greatly appreciated.

Thanks in advance,

 

Liam

Replies (3)

Please login or register to join the discussion.

Portia profile image
By Portia Nina Levin
09th Oct 2017 12:35

Your understanding that royalty income is usually disclosed as other income is incorrect.

If the PRS income is immediately derived from his "music work", then it forms part of the profits of his "music work" business.

Thanks (1)
Replying to Portia Nina Levin:
avatar
By Liam.em
09th Oct 2017 12:46

Thank you for your response.

I appreciate that 'Music work' is a vague phrase. He is a self-employed composer/musician so royalties do derive from his trade.

Just out of interest, if he were to cease and continued to receive royalties then would this be something entered on his self-employment page or in other income.

Thanks again

Thanks (0)
Replying to Liam.em:
Portia profile image
By Portia Nina Levin
09th Oct 2017 13:19

Those would then be post-cessation receipts, which are not liable to class 4, and would, I believe, then be reported as other income.

Thanks (0)