What is tax deductable for child earnings

[Thalias_Dad]

Hello all,

Hypothetically, if our child earns £10,000 in a year, she has a tax threshold of £5000 biut what else is tax deductable. I guess travel, accomodation and incidental expenses, but (and here is what I want to know) can the cost of training courses (eg drama, LAMDA, music lessons) be deductable at all? Does it have to be in the same year or anything? AND....if it is deductable, do we need to be getting receipts now - JUST IN CASE!

[Lakeviewp]

Hi Thalias_Dad,

Training is a grey area where HMRC are concerned. If the training costs are to put the individual in a position to 'trade' (or in dcs case, perform), then they are not tax deductible. Training can only be claimed where it can be justified as CPD (continuing professional development). This doesn't mean you couldn't claim the courses, just that HMRC may come back and deny the claim.

Expenditure will be offset against the income for that tax year so if dc doesn't earn anything in say 2010-11, expenditure in 2010-11 cannot be offset against income for future years.

However, if dc earns say £10,000 in 2010-11, you can certainly offset agents commissions, travel to and from performances and auditions. Subsistence is only going to be deductible if dc is away for a longer period of time, as meals out are considered by HMRC to have dual purpose (ie you needed to eat anyway so the fact you are not at home is your problem, not theirs!)

In this current tax year, dc can earn £7,475 of profits (ie income less allowable expenditure) before any tax will be due.

I would say, yes, definitely keep receipts for everything, because if you are in a position to need expenditure to reduce a tax liability it is a lot easier with receipts to prove it!

Hope this helps.

Kind regards

Lakeviewp

[Thalias_Dad]

Thank you that makes it clear - keep all income/expenditure for any given year and present them - just expect that some expenditure will be rejected that are not allowable within the law. Just need to keep fingers crossed for a paying job now!

[francescasmum]

In our practice if someone has to travel our of town to a meeting and they need to eat out, e put the receipt in petty cash and reimburse them. Our accountant says we do not need to justify small amounts of petty cash withdrawals. So I suppose if you were keeping the books you could just put it down as petty cash.

[Irishdancer]

Oldest ds earned £12000 before agency fees we got a account and they accepted training fees hair cuts train fairs cloths which u need for modelling hotel fees which U have to stay in if audition is a long way away ds ended up not having to pay very much just keep all resiceipts. Oldest ds has done over 45 adverts that is how he earned so much money in a year