Last Updated: November 2025

Understanding Royalties for Musicians and Performers

As a performer, singer, or musician, you may receive royalty income from organisations such as PPL, PRS, or directly from licensing agreements. Understanding how these are treated for tax and VAT purposes is important to stay compliant.

What Are Royalties?

Royalties are payments made to rights holders (like performers or composers) when their music is played, broadcast, or sold. For example:
– PPL (Phonographic Performance Limited) royalties for recorded performances
– PRS for Music royalties for composers or writers
– Royalties from licensing or sync deals

Tax on Royalties

Royalties are considered taxable income and should be reported on your Self Assessment tax return as part of your overall earnings.
– Include all royalty income received during the tax year
– If you’re self-employed, they form part of your business income
– If royalties are paid via a publisher or platform, they may deduct commission – If you know what it is, then you need to declare the full amount as income and then the commission as an allowable expense.

Are Royalties Subject to VAT?

This depends on the source of the royalties:

Royalties that can attract VAT

– Royalties from direct licensing or sync deals where you are issuing an invoice to a business or media company in the UK
– These may count toward your VAT threshold if your total taxable turnover exceeds the limit (£90,000 from April 2024)

Royalties that do not attract VAT

– PPL royalties are outside the scope of VAT
– PPL income does not count toward your VAT threshold
– PRS royalties may be zero-rated or outside scope depending on source and arrangement

Important: If you’re VAT registered, you still declare PPL royalties as income but mark them as “Outside the Scope of VAT.”

How to Record Royalties in Your Accounts

If using accounting software like Xero or FreeAgent:
– Use an income account called “Royalties” or “Licensing Income”
– Tag PPL income as Outside Scope of VAT
– Ensure VAT-able royalty income is tracked appropriately

Summary

Type of Royalty	Taxable?	VAT Applies?	Counts Toward VAT Threshold?
PPL Royalties	✅ Yes	❌ No	❌ No
PRS Royalties	✅ Yes	❓ Maybe*	❓ Maybe*
Licensing Deals	✅ Yes	✅ Yes	✅ Yes

*PRS treatment depends on contract structure – seek specific advice.

If you are no longer self employed and your only income is royalties, then the amounts will go as “other income” in the tax return. You will still get charged income tax on the amount, but it will not attract National Insurance.

Need Help?

At Performance Accountancy, we specialise in working with musicians and performers. If you’re unsure how to record your royalty income, claim expenses, or manage VAT, we can help.

Book a free call to chat about your royalties and accounting setup.