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Self Employed Writer Income

Self Employed Writer Income

I prepare the self assessment tax return for a limited company director client, who has begun to earn a small amount of self-employed income from writing children's books.  Her book contracts are fairly simple to understand - she receives a payment on signing the contract, a payment when the manuscript is delivered, and a payment when the book is published.  My question is - is it as simple as including the income in the accounts according to when the various payments are due?  

For example, she wrote one book in 2011-12.  The contract was dated 1 July 2011 read:

£500 on signing agreement

£1000 on acceptance of manuscript

£500 on publication

I assume that the initial £500 is included as turnover in 2011-12.  The manuscript was accepted on 30 April 2012 and the book was published on 31 December 2012.  So, I would expect the £1000 and the £500 for publication to be included in the 2012-13 accounts.

I am aware of the possibilities of averaging income for creators of literary works over two tax years, but this is not an issue as my client's income is very small.

I have not dealt with a writer's accounts before (and wouldn't have planned to!), so any tips would be appreciated.  


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23rd Jan 2013 12:55

Recognise income...

... when it is earned through performance of the contractual obligations.

The total income from the book is now known to be £2,000 (acceptance of the manuscript and publishing of the book are adjusting post balance sheet events - the part of the manuscript that was written was acceptable to and publishable by the publisher).

The author's contractual obligation is to write and deliver the manuscript.

At the end of 2011/12, how much of the manuscript is completed?  If it's 75%, then the income for 2011/12 is £1,500 (£2,000 x 75%) and there's a £1,000 debtor (amounts recoverable on contracts in SSAP 9 speak).

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23rd Jan 2013 13:11

Thanks George, extremely helpful.

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