The Organist And The Inland Revenue

[Ronald Shillingford]

I have a dilemma. I have been self-employed as a Classical Musician since 1999 and earn my principal income from Crematoria work and more recently from a Catholic Church I play at on Sundays. The priest pays me a cheque at the end of the year for 2.000 per annum. He knows I pay Tax because his Church Auditor asked to see verification of my Tax and earnings from my Accountant a few months ago. Now the Priest has told me over the last few days before he can pay me for the coming year the Auditor wants a letter from my Accountant to verify I am declaring this income for tax purposes. Why are they picking on the Organist's ? I have nothing to hide as my income is well below the average of my tax allowance. I have heard too that if your paid for any Funerals by Cheque by a Funeral Director they have to tell the inland revenue who they paid the cheque to in case the Organist is not declaring it on the Tax Form. I am worried that I might be investigated by the inland revenue. What do I do ? I am inclined to resigned from my position as I don't see what it has to do with the Church Audiors who conducts my Tax affairs. I don't have any type of contract with the Church as its different in Catholic Churches. The majority of Catholic Churches don't pay the Organist . Some are paid a ex gratia payment for their services. But I don't know of any Catholic Church where the Church Organist would have a contract and have their Tax and National Insurance Contribution deducted from a proper salary for the year. Has any one any further clarification or experience of this ?

[David Coram]

Solutions -

 

1) Seek clarification from your church as to whether the lump sum paid annually is classed as an honorarium, or expenses. I'm led to believe that this income is treated in a different way from a salary. A choral society I 'do' for pays me an honorarium for rehearsals, which I can effectively forget about, but I have to declare the concert fees.

 

2) The local crematoriums here do PAYE which makes life easier - OK, it's basic rate tax, but when the time to do the return comes you find you've already paid a lot of what you have to.

 

3) Funeral directors have to declare not just cash but also cheques as any business has to declare where its income got spent and why it shouldn't be taxed on it. Not just cheques which have to be declared.

 

Any of us is liable for a tax investigation at any time - a business I was running got inspected about four years ago and I was solemnly presented with a bill for £2.68 underpayment of VAT...

[contrabordun]

I guess Barry might have a word or two of advice (or you could read his book / website), but you might also try this site

 

http://www.church-organist.co.uk/

 

a website written by a retired Tax Inspector and Organist for organists with tax problems...

 

I was surprised by what David C wrote about an honorarium being irrelevant for tax purposes - how does that work then?

[Guest Barry Williams]

It matters not what you call the income, it is all taxable, save in the rare circumstance that a volunteer is reimbursed only the actual travelling expenses. i.e. they are paid the cost of travelling and receive no other payment for that work.

 

Although virtually all organist income is taxable under PAYE, if the church has no PAYE scheme, the Local Religious Centre Scheme will apply and the monies can be usually be paid gross if the annual amount paid is less than the personal allowance. The monies must still be included on tax returns. If the monies paid exceed the personal allowance the church must operate a PAYE Scheme, including NIC where applicable. It is irrelevant whether money is called an honorarium or anything else, it is all taxable and must be included in tax returns. That is the law.

 

See Updates to the Book for a free downloadable pdf on the Local Religious Centre scheme:

 

http://www.organistpublications.co.uk/Index.html Go to News & Updates, then Chapter 7 - tax and see item number 3.

 

I know of no circumstance whatsoever where a church auditor is entitled to consider an employee's tax return or to be entitled to verification of the type referred to. An employer's concern is whether or not to operate PAYE. Further advice is available from HM Revenue and Customs.

 

Please note that home to church (as a permanent place of business) is not an allowable expense for tax purposes even if you are self-employed. See Section 74 Income and Corporation Taxes Act 1988 and the case of Sargeant v Barnes. (This case concerned a dentist, but the principle is the same.)

 

 

Barry Williams

 

PS I apologise for the law lecture, but Contrabordun did suggest it!

[john carter]

It matters not what you call the income, it is all taxable.

Which reminds me of the day my boss took me out for a rather grand dinner to celebrate a successful venture. The following morning, the finance department rang to tell me that he had claimed the cost as expenses and details of the "benefit in kind" I had received were being passed on to HMRC so it could be taxed! I'm afraid there is no escape.

JC

[David Coram]

Wow, that worries me as it's completely at odds with what an accountant told me... and upon which I have based last year's tax return.............

[MusingMuso]

Which reminds me of the day my boss took me out for a rather grand dinner to celebrate a successful venture. The following morning, the finance department rang to tell me that he had claimed the cost as expenses and details of the "benefit in kind" I had received were being passed on to HMRC so it could be taxed! I'm afraid there is no escape.

JC

 

 

==========================

 

 

Of course there is an escape!

 

Petrol receipts, mileage allowances, telephone, correspondence, secretary's time, hire of clothes etc etc.

 

Business is business if you're getting paid.

 

On the other hand, there's always Brazil; though they tell me that Bulgaria is fairly corrupt too.

 

If I were younger, I'd just emigrate.

 

MM

[Guest Barry Williams]

Wow, that worries me as it's completely at odds with what an accountant told me... and upon which I have based last year's tax return.............

 

 

Entertaining expenses have not been an admissable deduction for many years.

 

Barry Williams

[Brian Childs]

Entertaining expenses have not been an admissable deduction for many years.

 

Barry Williams

 

 

So the situation relating to the dinner could not have arisen in the recent past, if I read this correctly ? However, surely there is a point of more general application, ie that most income is taxable whilst the majority of gifts or presents are not. And the recipient of a dinner invitation might be forgiven for assuming it was intended as a gift unless expressly informed to the contrary.I distinctly remember being taught that if your granny paid you to cut her grass that was income and had to be declared but that if you performed the deed out of the goodness of your heart and in gratitude she bought you the set of CDs you had been coverting or slipped you a tenner that was an exchange of gifts and not declarable. (Perhaps Barry could comment on whether that is still correct, or once was and is no longer, or has never been so and I was misinformed.)

 

One has some sympathy for a guest in the situation posited who might not choose to have his money spent for him in the way it apparently was.

 

Brian Childs

[Guest Barry Williams]

Oh dear! Brian's questions remind me of the sort of thing I used to set for law examinations years ago.

 

Briefly, if you do work and expect (or have an understanding of getting) a reward, that reward is taxable. If, on the other hand, it is a gift, (pure bounty, in legal speak,) it is usually not a consideration for Income Tax. The case law is interesting and not suitable for this Board, but three of the leading cases involve clergy and the Easter/Whitsun offerings. There is a smattering of 'benefit' matches' cases of cricketers as well. Tips are distinctly taxable, as are the 'Christmas Boxes' received by milkmen, postmen and dustmen. Receipients of dinners are less likely to be taxed on the benefit in kind, though the provider cannot claim the cost thereof as a deduction.

 

You really do not want a lecture on tax law, do you?

 

In terms of the ordinary business of playing the organ, anyone who thinks that the salary, fees or remuneration are a 'gift' should consult his or her Tax Inspector who may have different views!

 

Barry Williams

[andyorgan]

Not sure I want to get into the nitty gritty here, but you do mention sportsmans (ie cricketers and footballers mainly) benefits which is surely a huge anomoly that needs to be got rid of. The original quick whip round to help a late 30 something at the end of his career to open a pub/fish and chip shop is a thing of steam trains and black and white telly. These guys now get multi million pound salaries and there is simply no need for this hand out. Scenario above; organist gets £100 for wedding and hands over somewhere bewteen £23 and £40 in tax, footballer gets 7 figure sum for 'testimonial', gets to keep the lot. Doesn't seem fair really, does it?

[David Coram]

Entertaining expenses have not been an admissable deduction for many years.

 

Barry Williams

 

Ah - a classic case of not having quoted the correct post. The bit I was told about was honorariums and expenses; I was assured by a local accountant that one of my 'jobs' which pays me expenses only (i.e. I invoice them for the number of miles from home to there, and nothing more, at 40p a mile) doesn't count as an earned wage, and nor does the small regular monthly amount I receive by standing order for 'doing' a local choral society because of the way they are set up and the stipulation that the payment is an honorarium and nowhere near the going rate for the work done. If that's wrong, then I need a new accountant, please.

[Guest Roffensis]

I have a dilemma. I have been self-employed as a Classical Musician since 1999 and earn my principal income from Crematoria work and more recently from a Catholic Church I play at on Sundays. The priest pays me a cheque at the end of the year for 2.000 per annum. He knows I pay Tax because his Church Auditor asked to see verification of my Tax and earnings from my Accountant a few months ago. Now the Priest has told me over the last few days before he can pay me for the coming year the Auditor wants a letter from my Accountant to verify I am declaring this income for tax purposes. Why are they picking on the Organist's ? I have nothing to hide as my income is well below the average of my tax allowance. I have heard too that if your paid for any Funerals by Cheque by a Funeral Director they have to tell the inland revenue who they paid the cheque to in case the Organist is not declaring it on the Tax Form. I am worried that I might be investigated by the inland revenue. What do I do ? I am inclined to resigned from my position as I don't see what it has to do with the Church Audiors who conducts my Tax affairs. I don't have any type of contract with the Church as its different in Catholic Churches. The majority of Catholic Churches don't pay the Organist . Some are paid a ex gratia payment for their services. But I don't know of any Catholic Church where the Church Organist would have a contract and have their Tax and National Insurance Contribution deducted from a proper salary for the year. Has any one any further clarification or experience of this ?

 

 

I suggest you declare all your earnings, forget the terminology, it's income full stop, and pay yer tax like we all have to!

 

It's life!

 

R

[Ronald Shillingford]

I suggest you declare all your earnings, forget the terminology, it's income full stop, and pay yer tax like we all have to!

 

It's life!

 

R

 

 

 

I beg your pardon ? What exactly are u implying by the tone of that comment ? I do pay tax on the little income that I do earn. And for your information since your remarks were so crass I am single person on low income. In fact I earn so little as a self-employed Musician one does not exactly carry a Organ around , I was due for a tax rebate in the last tax year April 2007. I work part time as a cleaner in the evening on the PAYE just to make ends meet. So I pay my Tax like everyone else as u so put it. Don't u dare imply I am not declaring all my earnings. My books are audited by my Accountant every April. I f u had bothered to read the post it's the Church Auditors that have been sniffing around into my Tax affairs.

[Guest Roffensis]

I beg your pardon ? What exactly are u implying by the tone of that comment ? I do pay tax on the little income that I do earn. And for your information since your remarks were so crass I am single person on low income. In fact I earn so little as a self-employed Musician one does not exactly carry a Organ around , I was due for a tax rebate in the last tax year April 2007. I work part time as a cleaner in the evening on the PAYE just to make ends meet. So I pay my Tax like everyone else as u so put it. Don't u dare imply I am not declaring all my earnings. My books are audited by my Accountant every April. I f u had bothered to read the post it's the Church Auditors that have been sniffing around into my Tax affairs.

 

 

So why the concern? If all is above board then of course you have nothing to concern yourself over. I have always been able to put my head on my pillow and sleep at night as doubtless you do also. Do forgive me if I offended.

 

R

[Colin Richell]

So why the concern? If all is above board then of course you have nothing to concern yourself over. I have always been able to put my head on my pillow and sleep at night as doubtless you do also. Do forgive me if I offended.

 

R

 

 

Oh Roffensis,(Richard) you remind me of someone else, who has the knack of upsetting good people. What pleasure do you gain from this ?

Best wishes

Colin Richell.

[gazman]

Oh Roffensis,(Richard) you remind me of someone else, who has the knack of upsetting good people. What pleasure do you gain from this ?

Best wishes

Colin Richell.

Looking at the original response from Roffensis, I don't think there was any intention at all of offending. It was just mild humour, surely!

[martin_greenwood]

Looking at the original response from Roffensis, I don't think there was any intention at all of offending. It was just mild humour, surely!

That's how I read it too. If you above the board in how you file your tax returns, then whether or not the IR choose to investigate is neither here nor there - there won't be anything untoward for them to find.