In light of the Booker-prize shortlist this week, we put together some top advice for authors when it comes to tax on prizes, grants and awards.
Below is some guidance on the rules that might apply –
Educational grants
In general, these are not taxable.
Prizes and awards
Any prize or award that is unsolicited by the author or agent is tax free. Any agreement between author and agent should be silent on the subject of awards, grants and prizes. If an author or agent asks the publisher to submit a book for an award, this will make it taxable.
Where an author enters a writing competition and wins a prize, this is a taxable receipt of the profession.
Grants, bursaries etc
Where the agreement is that the grant is for a specific book project or requires work to be done by the author, as is general with bursaries, this is a taxable item. Where a grant is made to an author to enable them to take time off to develop personal talents, these are generally tax free.
Effect on state benefits
Authors in receipt of means-tested state benefits will need to seek advice from organisations such as Scope or Citizens Advice, in case their entitlements are affected by receiving prizes, grants, awards or any unusual payment.
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