VAT for musicians: should you add VAT on top or include it?

Start with four questions. 1. Are you VAT registered? If no, do not charge VAT. Keep watching your taxable turnover and invoice your normal fee. 2. Are you over, or about to go over, the VAT threshold? GOV.UK says registration is required when taxable turnover for the last 12 months goes over £90,000, or when you expect it to go over £90,000 in the next 30 days. 3. What exactly are you supplying? A live performance fee, session work, production service, teaching, merchandise, digital content, licensing income and ticket/admission income can have different VAT questions. 4. Who is the customer and where are they? A UK venue, a UK business, a private client, an overseas label and a platform can produce different VAT outcomes. For cross-border work, the 'place of supply' rules matter.

This is the sentence that saves arguments: 'My fee is £500 plus VAT where applicable.' That means VAT is added on top if you are VAT registered and the supply is taxable. The invoice would show £500 net, £100 VAT at 20%, £600 total. If the deal says '£500 including VAT', the total amount payable is £500. At 20%, the VAT is included inside the £500. You calculate it by dividing the VAT-inclusive amount by 6, so £500 includes £83.33 VAT and leaves £416.67 net. If the deal only says '£500' and nothing about VAT, you have uncertainty. In business-to-business work, people often expect VAT-registered suppliers to add VAT to a net fee, but you should not rely on expectation. Confirm whether the fee is 'plus VAT' or 'inclusive of VAT' before you perform the gig, session or commission.

Do not add a VAT line. Do not write 'VAT: 20%'. Do not describe part of your price as VAT. You can still set your own price. For example, you can charge £500 for a DJ set or £750 for a production job. But if you are not VAT registered, the invoice should not say that £100 of that amount is VAT. Useful wording: 'Not VAT registered - no VAT charged.' If a client asks for a VAT invoice and you are not registered, the answer is simple: you cannot issue one. Send a normal invoice instead.

A common music-industry trap is mixing up two different supplies: - the artist's income from a label, distributor, promoter or client - the manager's invoice to the artist for management commission If an artist receives income described as gross, net, net plus VAT or VAT-inclusive, that does not automatically mean the manager can charge VAT on their commission. The manager's invoice is a separate supply of management services. If the manager is not VAT registered, their invoice should not include a VAT line, should not say VAT at 20%, and should not describe part of the commission as VAT. They can invoice the agreed commission if the contract allows it, but they should not charge VAT unless they are VAT registered. The more subtle problem is commission base. A manager may not charge VAT at all, but still calculate commission on the artist's gross bank receipt. If that receipt includes VAT the artist collected from a payer, the calculation can overstate commission unless the contract clearly and knowingly says commission is taken on VAT-inclusive receipts. Example: a label pays an artist a £1,000 fee plus £200 VAT. The artist receives £1,200, but the £200 VAT is usually output tax to account to HMRC, not retained artist earnings. If a manager charges 20% commission on £1,200, the commission is £240. If the contract says commission is on the net fee before VAT, it should be £200. The manager has not charged VAT, but the artist has still paid commission on VAT money collected for HMRC. This is why the word 'gross' needs careful definition. Gross receipts, gross income and gross earnings can mean different things. For commission, the agreement should say whether VAT collected from a payer is excluded before the manager's percentage is calculated. If the same accountant advises both artist and manager, get a second opinion before paying or correcting the invoice. Shared advice can miss the conflict: the artist needs someone checking what the artist actually owes, not just processing both sides of the transaction.

For a taxable UK supply, your invoice should show the VAT separately. GOV.UK says invoices must include your VAT number and display the VAT separately. A clean VAT invoice for a musician might show: Session guitar recording for Artist Name, 12 May 2026 Fee excluding VAT: £500.00 VAT at 20%: £100.00 Total payable: £600.00 Include your VAT registration number, invoice number, invoice date, tax point if different, supplier details, customer details, description of the service and the relevant totals. Keep a copy for your records.

The registration threshold is based on taxable turnover, not profit. That means you look at the value of what you sell or supply that is not exempt or outside the scope of VAT. For musicians, that can be awkward because income arrives in different forms: gig fees, teaching, production, session work, merch, advances, licences, commissions, sync work, royalties, platform income and expenses recharged to clients. Do not guess. Keep a rolling 12-month income tracker and mark income by type. If you are approaching £70,000 to £80,000 in annualised income, it is time to speak to an accountant rather than waiting for a panic at £90,001.

Musicians often hear that live music can be VAT exempt. That is only part of the story. HMRC guidance on admission charges to cultural events is mainly about admission charges made by public bodies and certain eligible cultural bodies. It is not a magic rule that makes every musician performance fee exempt from VAT. If you are a self-employed musician invoicing a promoter, venue, agency, private client or production company, do not assume 'live music equals exempt'. The correct VAT treatment depends on your supply, your customer, the contractual structure and whether a specific exemption actually applies.

Cross-border music work is where VAT gets especially easy to get wrong. GOV.UK's place-of-supply guidance says the general B2B rule for services is that the supply is made where the business customer belongs. The general B2C rule is different: it is usually where the supplier belongs. There are also special rules for events, admission and services connected with performances. So if a US label, EU publisher, overseas promoter or foreign private client asks whether you should charge UK VAT, pause before answering. Keep evidence of who the customer is, where they belong and what service you supplied, then get proper tax advice if the amount is meaningful.

You can choose to register for VAT below the threshold. This can make sense if you mainly work with VAT-registered businesses that can reclaim VAT, or if you have significant VAT-bearing costs such as equipment, studio hire and professional services. It can be painful if your customers are consumers, private students, wedding clients or small non-VAT-registered businesses, because adding VAT can make you look 20% more expensive unless you absorb it in your fee. The commercial question is: will your customers tolerate VAT on top, and will input VAT recovery outweigh the extra admin and pricing pressure?