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Tax Question: Are streaming royalties foreign income?

PeterBaumann

PeterBaumann

Active Member
I have some music that's been distributed by RouteNote to streaming platforms (Spotify, Apple Music etc.)

I'm based in the UK. RouteNote Ltd seems to be registered in the UK (according to a search of Companies House) but income shows in USD on the RouteNote website. The amount paid to me appears on my bank statement in GBP (they pay you once you hit $50, and that shows as the GBP equivalent on my bank statement).

Income from streams/downloads is (usually) from a number of different countries.

How does one report this for tax purposes? Does it fall under standard (domestic) income or foreign income and, if the latter, do you need to somehow account for the 0.0000001p you earned in one territory separately from the 0.0000001p you earned from a stream in another?

To add to the complexity, there's also a royalties income section on HMRC's Self-Assessment form, although when I spoke to them they advised that if income is 'Foreign' it should go in the Foreign section rather than the Royalties section. If it's domestic, it goes in the Royalties box. 🤷‍♂️

Anyone got any tips on how this should be accounted for?
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Deadline is Monday for submitting, so suspect I've missed the boat for that... (my fault for leaving it to now!). I'm hoping people on here from the UK might be able to offer me some guidance based on their experience (with the caveat that they are not tax advisors).
 
Are you a sole trader or an employee who gets this income on the side?

Has tax been deducted from the foreign income?

For the most part, the answers to these questions don't matter that much, especially if you're talking 50 or a 100 quid, for self-assessment purposes. The foreign income pages are mainly for savings and investments (dividends and stuff from Santander for example) or for people who don't live permanently in the UK, or have overseas income that's already taxed (which is unlikely in this case). Just because you got paid in USD doesn't mean it's "foreign" for the purposes of the form.

The chances are you only need to add the income to any freelance income in the main self-employment pages. The origin isn't a big deal and as RouteNote has a UK office, the chances are this is coming from there (I do have a situation where I invoice a client in the US in GBP and it's paid from the US - but even then it's "domestic" income for the purposes).

It's possible they could get arsey about it should they ever investigate you but this is so unlikely it's not worth worrying about and if it makes no difference to the overall tax bill all they will do is say "put it here next time". You're much better off getting the form in on time even if something is slightly wrong.
 
I'm a sole trader. Next year will be more complicated for me as I've started working freelance with a company in the States (I do the work in the UK, and get paid in GBP) — HMRC today told me that that should/would go in the Foreign income section, so I'll need to do more research on that/speak to a tax adviser before this time next year to clarify!

The only doc I have for the streaming income is a breakdown of each territory per month (think "0.000003p from 6x streams on Spotify in Germany"-type spreadsheet). There's no info on there about tax amounts. Checking my bank statement, the payment is from RouteNote Ltd, so it looks like it may have been paid by their UK-registered company (even if it was paid in USD).

I suppose this also applies to PRS payments. Let's say you have £10k in royalties on your PRS statement for the year — £5k from broadcasts in the States, £5k in the UK. Would the whole lot go under UK income (as it's come from PRS), or would £5k go under UK and £5k go under Foreign (US)?
 
It sounds as though you live in the UK, you are receiving the money in the UK, and performing the work in the UK. No tax is being deducted by foreign jurisdictions (I think?).

If you were a US citizen and the facts were the same (everything "USA"), you would have to pay tax on all the income in the US. If tax had been withheld by a non-US jurisdiction (like, say, France or Japan), you most likely could take that amount as a deduction or even a credit against your US tax obligation.

That said, I don't think a chat board is a good place to get accurate tax advice!

Best of luck and congratulations on the gig(s).

Kind regards,

John
 
PeterBaumann said:
I have some music that's been distributed by RouteNote to streaming platforms (Spotify, Apple Music etc.)

I'm based in the UK. RouteNote Ltd seems to be registered in the UK (according to a search of Companies House) but income shows in USD on the RouteNote website. The amount paid to me appears on my bank statement in GBP (they pay you once you hit $50, and that shows as the GBP equivalent on my bank statement).

Income from streams/downloads is (usually) from a number of different countries.

How does one report this for tax purposes? Does it fall under standard (domestic) income or foreign income and, if the latter, do you need to somehow account for the 0.0000001p you earned in one territory separately from the 0.0000001p you earned from a stream in another?

To add to the complexity, there's also a royalties income section on HMRC's Self-Assessment form, although when I spoke to them they advised that if income is 'Foreign' it should go in the Foreign section rather than the Royalties section. If it's domestic, it goes in the Royalties box. 🤷‍♂️

Anyone got any tips on how this should be accounted for?
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If Routenote pays you, it's UK income. If there is any withholding tax form the original source, you will gat a tax statement, which you should pass onto your accountant.
 
Lot of companies based in the UK pay 'income' in USD. Just as roughly 80% of FTSE 100 companies pay dividend income in $$$. It's taxable in the UK regardless.
 
PeterBaumann said:
HMRC today told me that that should/would go in the Foreign income section, so I'll need to do more research on that/speak to a tax adviser before this time next year to clarify!
Click to expand...
I think they've got that bit wrong - it should appear in the self-employed pages as part of turnover because you will almost certainly be on a W8BEN so it won't have US taxapplied. They're not really geared up for stuff like this on the helplines. But check with a tax adviser.
 
On reflection, I might have been a bit unfair on the helpline. There is a £2k threshold that I'd forgotten about (as it's not been relevant to me for some time), below which overseas income doesn't need to be declared. I think in this particular case, it doesn't matter as it looks as though the money is coming via the UK. But it might apply to the next year's work if it stays below that threshold. But, again, tax adviser as the wording in the notes isn't entirely clear IMO.
 
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