Subscriptions The Biggest Coding Mistake Musicians Make in Xero

Hello, I’m Louise from Performance Accountancy. If you are a musician using Xero, there is one mistake I see over and over again. It looks harmless, but it can create problems later.

The mistake is coding everything as subscriptions.

I understand why this happens. You pay for something monthly, it feels like a subscription, so you put it in subscriptions. But that is not how HMRC looks at it. The category should reflect what the cost is for, not simply how you pay for it.

Your Musicians’ Union membership is a subscription. That is a proper professional subscription. But Google Workspace is software. Dropbox is software. Your website hosting is marketing. Spotify Premium may be research and professional development if you are using it for repertoire, learning or work-related research.

The important point is that the accounting category should reflect the purpose of the expense. It should not be based on the fact that the payment happens monthly.

This matters because, if your accounts show £3,000 of subscriptions and HMRC ever looks behind the scenes, they may compare that figure with their list of allowable professional subscriptions. Google Workspace is not on that list. Spotify is not on that list. Website hosting is not on that list.

That means perfectly valid business expenses can start to look suspicious simply because they have been put in the wrong place.

When your coding reflects the purpose of each cost, your accounts tell the correct story. That makes your life easier, it makes your accountant’s life easier, and it means the accounts are much clearer if anyone ever needs to review them.

If you are using Xero, go into your chart of accounts and check whether your categories are based on purpose or convenience. That one small change can make a big difference.