# UK Authors trading as a limited company



## J.B. Leigh (Jul 23, 2013)

This question is aimed *only* at *UK authors* who trade under a *limited company*.

Which of the following do you do and why?

*1) Copyright*
i) Assign (ownership) of the copyright of your books to the limited company
or
i) Licence the copyright of your books to the limited company
or
iii) Retain the copyright under your name
or
iv) or some other arrangement - please specify?

*2) Payments*
Which of the following does the company pay to you:

i) dividends
ii) salary
iii) licence (or other) fee

It would be helpful if you would give your (or your accountants) reasons for your choices above.

_Background_: I have traded under a limited company previously so I'm familiar with the tax advantages of dividends. I'm about to set up a new limited company which will receive payments from Amazon, Apple etc. My questions are specifically related to the copyright situation (within a limited company).


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## Leanne King (Oct 2, 2012)

1) At the moment I've retained copyright in my own name, but I'm almost certainly going to assign all copyrights to the company, for succession planning reasons. It's easy enough to reassign them back again if I change my mind, just have to write yourself a note and sign it.

2) Dividends, for the tax advantages you mentioned.


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## Mark E. Cooper (May 29, 2011)

Leanne King said:


> 1) At the moment I've retained copyright in my own name, but I'm almost certainly going to assign all copyrights to the company, for succession planning reasons. It's easy enough to reassign them back again if I change my mind, just have to write yourself a note and sign it.
> 
> 2) Dividends, for the tax advantages you mentioned.


I don't know this for fact (not a lawyer etc) but assigning assets to and from a company will require money to change hands, or the HMRC will assume you are trying to evade tax. You can't just do it with a £1 nominal amount either. If you ever did this, your copyright has a value (equal to prior and future royalties) that you have to account for. Your company cannot simply gift you with 10 book copyrights worth £100,000 or so without paying tax on the transaction (again this is my amateur understanding, not a lawyer or accountant etc)

I've kept all copyright in my name. If there is ever a reason to close my company, I can cease trading in moments. I owe no money, am owed no money, no assets to trade etc. I own all shares, am the only employee. If I had to, I could file the company for bankruptcy (though I cannot imagine ever needing to do that, or imagine a reason why I would) and it wouldn't have any effect upon the actual books.

My company pays me a salary as the director. I haven't taken dividends (yet) because my company is still in its infancy at 2 years old. I could take a dividend at any time now, but I don't see a need this year.


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## Leanne King (Oct 2, 2012)

Not a lawyer either, but I'd argue the copyright isn't the asset. The company is already the benefical owner of the works and already receives all income relating to them. Assigning copyright doesn't change that, so there is zero monetary value in the assignment. The government's own documentation on this specifically recommends using the £1 nominal sum. But I can see how an overzealous tax inspector could take issue. That said, I've transferred assets back and forth between self and companies many times without trouble, and all my accountants over the years have been fine with it. (Again, I am not an accountant, neither do I play one, write one, etc).


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## 75845 (Jan 1, 1970)

So far I have decided that incorporating creates more trouble than help at the moment so have not done so. I have done a fair bit of research as I will incorporate soon but just not yet. I agree that copyright is probably not an asset in the sense that Mark is taking about. The following example shows the problems with fixed assets, but as you did not pay for your copyright (you got it free as soon as you wrote the book) this should not apply:

http://www.tayloraccountancy.net/blog/2014/august/13/how-to-avoid-tax-charges-on-your-fixed-assets-when-you-incorporate/

Nevertheless, I would advice not assigning copyrights to the limited company as those copyrights could be assigned to the victor in a law suit (e.g., if you end up on the losing side of a big defamation or copyright infringement case or successfully defend one but don't get costs).

Paying yourself a small amount has National Insurance benefits (ask an accountant).

If and when I incorporate I will set up an arm's length contract giving the company the right to distribute the book for a short number of years (see law suit section above) while retaining complete control of the copyright. At least that is the theory.


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## J.B. Leigh (Jul 23, 2013)

Thanks for all the replies so far. I'm relatively happy with the salary/dividend situation. Having operated under a limited company before, I agree that a small wage which provides a NI credit is sensible (bulk of income being provided via dividends).

The copyright question I find a much more problematic. I can see issues/pitfalls in all of the options, and having discussed this with more than one accountant, I still don't feel there is a clear cut solution.

It seems to me there are three options (others?):

*1) Assign the copyright to the limited company.*
Would this result in issues with regard to the transfer of assets as Mark suggested? I'm not sure. Leanne/Mercia suggest it might not because the copyright has no value at the point the book was written. But is that true (at least as far as HMRC is concerned)? If the book goes on to earn money then does the value of the copyright change? What about when the copyright is re-assigned from the company to the author. Then there is the other issue (highlighted by Mercia) that the copyright becomes an asset of the company and could be in jeopardy in the event of a law suit.

*2) Retain the copyright in the name of the author*
In many ways this appeals to me most, but the question then arises - what right does the company have to publish the book if it does not hold the copyright? In this scenario isn't it possible that questions would be asked (by HMRC) such as '_how can a company publish a book for which it holds neither the copyright nor a contract to do so_'?

*3) Retain the copyright in the name of author but have a contract between author and limited company*
Similar to 2) above, but here the limited company has a clear right to publish the book on behalf of the author. Presumably the situation then becomes the same as in tradpub where a contract between author and company is required - I assume this is the arm's length contract which Mercia mentioned.

Here again, questions arise:

i) If such a contract existed, wouldn't that contract have to include a payment in the form of advance and/or royalties to the copyright owner to be considered a valid contract (_consideration_ in contract law terminology)? If no payment was included under the contract, surely the HMRC would view this as suspicious. If there is no payment, the copyright owner is effectively allowing the company to profit from the book for no return (I realise in practice the copyright owner is a director and will receive salary and/or dividends, but that is payment for being an employee/officer of the company not in return for copyright). I suppose there could be a 'nominal' payment but again this come under scrutiny if, for example, it is much lower than tradpub advances/royalties.

ii) If such a contract was created and did include a _realistic_ payment (advance/royalties) then this may negate (at least partially) the advantages of being paid through a limited company because such advances/royalties would be 'personal payments to the individual and subject to the normal income tax charges.

I have chased this problem around and around, and have yet to come up with a definitive answer. In many cases, and I include myself in this, I believe a lot of people are operating under a limited company using models 1) or 2) above in the hope that what they are doing is _okay_, and it may well be. Still, it would be nice to know for sure.

I guess the only solution may be to track down an accountant/lawyer who specialises in this area of law. I'm not sure the general high street accountant is any wiser than some of the minds on this board.

This question is particularly relevant to any UK indie author who has 'hit the big time' because I would expect HMRC to be more likely to take an interest in someone with high earnings.

Please continue to add your thoughts to this discussion. I welcome all views/experiences from UK authors in this position.


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## CelinaGrace (Nov 20, 2013)

My publishing company pays me a basic rate salary and I take the rest of the money as dividends.

I'd never thought about the copyright issue, to be honest. I just keep the copyright of all my books in my writing name.


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## CelinaGrace (Nov 20, 2013)

Actually, I have a question too. I've only been a limited company for 6 months and am now getting slightly worried that I'm not keeping stringent enough financial records. Do any of you use a bookkeeper for your accounts? I have an accountant but I'm keeping my own records at the moment.


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## BlueGen (Jun 14, 2014)

All my copyrights are in my own name. Many of them were created before I went limited, and it has never caused a problem. So I have put all subsequent copyrights in my name too. 

I too take the basic salary of about £10k and the rest as dividends. As far as tax goes, HMRC has never had any interest in the copyrights to my books. I just don't think it's their area of concern. All they seem to want to know is how much is coming in, where it's coming from, and how much is going out. 

I just don't think copyright is relevant as far as tax is concerned.


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## BlueGen (Jun 14, 2014)

CelinaGrace said:


> Actually, I have a question too. I've only been a limited company for 6 months and am now getting slightly worried that I'm not keeping stringent enough financial records. Do any of you use a bookkeeper for your accounts? I have an accountant but I'm keeping my own records at the moment.


I paid a bookkeeper to set me up with Xero, an online accountancy package. I paid her about £75 for three hours work. It was probably the best £75 I have ever spent. It's amazing what bookkeepers know and how much they can help.

That is, if you're a messy scatterbrain like me.


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## J.B. Leigh (Jul 23, 2013)

CelinaGrace said:


> Actually, I have a question too. I've only been a limited company for 6 months and am now getting slightly worried that I'm not keeping stringent enough financial records. Do any of you use a bookkeeper for your accounts? I have an accountant but I'm keeping my own records at the moment.


I run my accounts on Quickbooks and use an accountact only for year-end audit.


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## J.B. Leigh (Jul 23, 2013)

> All my copyrights are in my own name. Many of them were created before I went limited, and it has never caused a problem. So I have put all subsequent copyrights in my name too.
> 
> I too take the basic salary of about £10k and the rest as dividends. As far as tax goes, HMRC has never had any interest in the copyrights to my books. I just don't think it's their area of concern. All they seem to want to know is how much is coming in, where it's coming from, and how much is going out.
> 
> I just don't think copyright is relevant as far as tax is concerned.


I'm fairly sure that most UK authors with a limited company do this - I did exactly this with my previous company (and didn't have any problems). Even so, I still harbor doubts about possible implications.

It's a strange situation. Essentially the company is earning income from something (the copyright) it doesn't actually own or even have a license to use/sell.

If for example my company was to publish another author's works, I would expect to have a contract with that author under which I would license the copyright and pay that author via advance/royalties. And yet because I am the author, I don't do this.

I think my concern (paranoia) stems from other run-ins with HMRC (on totally unrelated areas of business) where assumptions had been made which proved to be incorrect.


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## Mark E. Cooper (May 29, 2011)

J.B. Leigh said:


> I'm fairly sure that most UK authors with a limited company do this - I did exactly this with my previous company (and didn't have any problems). Even so, I still harbor doubts about possible implications.
> 
> It's a strange situation. Essentially the company is earning income from something (the copyright) it doesn't actually own or even have a license to use/sell.
> 
> ...


As the employee of the company, you aren't paid royalties. You are paid a salary and dividends, and your company is paid royalties out of which it pays you. Or something like that.


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## J.B. Leigh (Jul 23, 2013)

Mark E. Cooper said:


> As the employee of the company, you aren't paid royalties. You are paid a salary and dividends, and your company is paid royalties out of which it pays you. Or something like that.


I could see that argument if the company held the copyright (or licence to use the copyright), but if the author holds the copyright and has no contract with the company, what is the company getting paid for?

Not arguing - just playing Devil's advocate.

I would also argue that what Amazon (and others) pay to us are not royalties in the ture sense of the word even though that's how they are referred to. But that's a whole other discussion.


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## J.B. Leigh (Jul 23, 2013)

The only way I can begin to rationalise this is to say that the company is paying me (the director) for running the company - admin, marketing, accounts etc. 

If I say the company is paying me for writing (books) surely that becomes 'work for hire' in which case the copyright would belong to the company.


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## Guest (May 7, 2015)

The author can assign copyright to the company (at no cost, but give it a nominal value) and assign the royalties to themselves for life. If you make your spouse/children directors and give them shares in the company, your death means your books and the royalties are safeguarded and so are your family (money wise).

There is very little risk of assets being lost for any reason unless you run a loose financial ship, in fact a company can protect your assets better than you can. If you go personally bankrupt there is no limit on liability. a Ltd company is 'limited' liability. you can be a personal bankrupt and feasibly still keep the limited company (get an accountant to sort that one). There is no requirement to be an armchair lawyer, its not a lawyers job, its purely an accounting function. No contract needed, an assignment (a letter will do) signed by you is sufficient, then ensure you change the copyright notice on all of your books -- it applies from the moment you assign it, which means all prior sales are yours, all subsequent sales are the company's.

The best way to sort the income issue is to pay yourself the minimum wage to resolve your ongoing NIC and tax liabilities as salaried employees, then use the leftover income at the end of the year to decide the amount you pay yourself in dividends (you can draw down on that - see your accountant). This also helps you separate business and personal expenditure. There are plenty of incentives to go Ltd, go get an accountant (not a bookkeeper).

As in all things different accountants work in different fields with wide ranging expertise - always get professional advice - and follow it.


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## J.B. Leigh (Jul 23, 2013)

Rubens4tune said:


> The author can assign copyright to the company (at no cost, but give it a nominal value) and assign the royalties to themselves for life. If you make your spouse/children directors and give them shares in the company, your death means your books and the royalties are safeguarded and so are your family (money wise).


Thank you for the reply. The section quoted above interests me, and I would appreciate your interpretation of this using an an example based on a book published via KDP.

_*Example:*_
Author A writes Book B
Author A then signs the copyright of Book B to Limited Company C (of which he is the director) and the royalties to himself for life. When the book is published the copyright is listed as Company C.

*When payments are made by KDP, are they made to:*

i) Company C - who own the copyright
OR
ii) Author A - who is entitled to Royalties for life

if the answer is Company C (i above) what purpose did '_royalties for life to the author serve_'?

if the answer is the Author A (ii above) then the payment is bypassing the limited company


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## Guest (May 7, 2015)

J.B. Leigh said:


> Thank you for the reply. The section quoted above interests me, and I would appreciate your interpretation of this using an an example based on a book published via KDP.
> 
> _*Example:*_
> Author A writes Book B
> ...


My company owns the copyright to my books. A > B
My KDP account is in my company's name. <C>
KDP pay me into whichever account I nominate. <D>
(The copyright ownership is not the same as the royalty entitlement).
If your objective is to protect your books upon your death the above scenario does that whilst allowing you to retain full earnings from the books. you can still keep all royalties to your books, but run the whole thing through your company. At the end of the day its just a mechanism for managing your business. Your business is writing. The Company is just a fiscal platform recognised by the Inland Revenue.

My company is owned by my family and me. I own all voting rights until my death, it then goes to my wife, then to my kids when she pops off. There is no liability, other than tax. All bills are paid on receipt. No loans, overdrafts or liens (so, no risk of bankruptcy).

As an example. The money I earn from books is allocated to company revenue. I draw down every month the amount I need to pay my expenses including food, drink and dining out. I declare half of this as my salary. As my wife is a director also, she splits the other half with me which brings both of us below the tax threshold (she is my advisor and editor). The balance remains on the books and pays for advertising, cover art, travel, entertainment, editing etc., What is left at the end of the year is drawn down as dividends (and tax paid) or left in Ltd company for leaner years. If I want anything, a car, computer, desk, sunbed, parosol, whatever. I buy it - the accountant decides if its personal or business and it's allocated accordingly. It's not complicated.


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## J.B. Leigh (Jul 23, 2013)

Rubens4tune said:


> KDP pay me into whichever account I nominate. <D>


Out of curiosity, which account do you nominate?

i) the limited company's
Or
ii) your personal account

If it is the limited company, then isn't the (royalty) payment being made to the copyright holder?


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## Guest (May 7, 2015)

J.B. Leigh said:


> Out of curiosity, which account do you nominate?
> 
> i) the limited company's
> Or
> ...


The account it goes into isn't as important as the way you do your books. e.g. I get paid by D2D into PayPal, I get paid by Amazon into my bank. I declare all my income to the company accountant. He puts it in the right place. It's not important what name is on the account. If I buy book covers via Paypal it comes out of my bank account. all the transactions are shown whether personal or business. I just tell my accountant why I bought it, or what I brought and he decides if its tax allowable or income. At the end of the year I might owe a little more tax, or not. It's not a complicated setup.


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## J.B. Leigh (Jul 23, 2013)

I agree the account itself isn't important, but where the accountant records the income is.

If it is recorded as company revenue then it will end up on the P&L. From what you have said - ie that you draw a wage and then receive dividends, then my guess is that is what happens. The alternative would be for it to paid to you directly as personal income - you don't appear to be doing that.

If it is company revenue then the payment is going to the limited company (and copyright holder)

I actually agree this is the correct way to proceed (rather than holding onto the copyright as author). Where I disagree is the need to have the 'royalties to author for life' clause for the simple reason that this isn't what is happening.

What is happening is:

*Payment (royalties)* KDP -> Limited company (copyright holder)
*Wages/Dividend Limited* Company -> author


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## Lydniz (May 2, 2013)

Can I ask a stupid question? What is the purpose of forming a limited company if you're a sole trader whose only income comes from books? Are there such huge advantages to it? It seems to do nothing but add a massive layer of admin although I'm sure someone can correct me on this.


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## Guest (May 7, 2015)

J.B. Leigh said:


> Where I disagree is the need to have the 'royalties to author for life' clause for the simple reason that this isn't what is happening.


I didn't quote that as my solution, just an option for those who want to protect the copyright, but not place their income into the company.

and everyone should get an accountant and do what;s best for them.



Lydniz said:


> Can I ask a stupid question? What is the purpose of forming a limited company if you're a sole trader whose only income comes from books? Are there such huge advantages to it? It seems to do nothing but add a massive layer of admin although I'm sure someone can correct me on this.


The explanation is above in the thread.


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## Lydniz (May 2, 2013)

Rubens4tune said:


> The explanation is above in the thread.


I was hoping for the tl;dr version. But thanks anyway.


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## J.B. Leigh (Jul 23, 2013)

Lydniz said:


> I was hoping for the tl;dr version. But thanks anyway.


Briefly
1) the tax you pay via a limited company (Corp Tax) is far less than income tax.
2) by paying a certain wage level you can take advantage of the zero income tax level and receive a NI credit without actually paying NI

Bottom line: less tax/NI


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## CelinaGrace (Nov 20, 2013)

Lydniz said:


> Can I ask a stupid question? What is the purpose of forming a limited company if you're a sole trader whose only income comes from books? Are there such huge advantages to it? It seems to do nothing but add a massive layer of admin although I'm sure someone can correct me on this.


When I became a limited company, my accountant looked at me across his desk and said solemnly "You could not have done this soon enough." As I had recently received my horrific tax bill from HMRC, I could only agree!

As J.B Leigh points out, the tax advantages are huge.

Thanks for the book-keeping suggestions too.


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## Lydniz (May 2, 2013)

J.B. Leigh said:


> Briefly
> 1) the tax you pay via a limited company (Corp Tax) is far less than income tax.
> 2) by paying a certain wage level you can take advantage of the zero income tax level and receive a NI credit without actually paying NI
> 
> Bottom line: less tax/NI


Thanks. It's on my to-do list but my husband (who had a limited company for many years) always goes white in the face when I mention it and makes doomy pronouncements about the amount of admin involved.


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## Mark E. Cooper (May 29, 2011)

Lydniz said:


> Thanks. It's on my to-do list but my husband (who had a limited company for many years) always goes white in the face when I mention it and makes doomy pronouncements about the amount of admin involved.


The only admin I have to do is print all invoices and drop them in a box. AND update my accounting software. My accountant set up my company. He handles all reporting and paperwork needed by companies house etc. At the end of the tax year I give him a copy of the file that my software produces. I'm not vat registered.

Tax is the reason I do this at all. I pay corporation tax which is less than I would pay without LTD status. I invest heavily in promotion, audio, etc. This means that money isn't taxed as profit. I take nothing out of the company account unless I really nneed to.


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## Yakob76 (May 8, 2015)

Really interesting thread.

How long did the process of setting up the company take?


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## Guest (May 8, 2015)

Yakob76 said:


> Really interesting thread.
> 
> How long did the process of setting up the company take?


30 minutes tops


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## 75845 (Jan 1, 1970)

Mark E. Cooper said:


> Tax is the reason I do this at all. I pay corporation tax which is less than I would pay without LTD status. I invest heavily in promotion, audio, etc. This means that money isn't taxed as profit.


Those promotion and audio expenses also count against income for those being taxed as self-employed sole traders. You are taxed on your profits from self-employment, not your income, you can even carry a loss over for three years to set against subsequent profits.


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## Mark E. Cooper (May 29, 2011)

Mercia McMahon said:


> Those promotion and audio expenses also count against income for those being taxed as self-employed sole traders. You are taxed on your profits from self-employment, not your income, you can even carry a loss over for three years to set against subsequent profits.


Correct, and that's another reason I commissioned 4 covers from Jeff Brown in the run up to April, not 1  I'll use them some time in the coming years.


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## Lydniz (May 2, 2013)

Heh. I am definitely going to read through this thread properly at some point when I'm ready to face it all. My tax bill as a self-employed person is going to be a bit eye-watering this year.


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## Brookster (Apr 23, 2015)

Let,s say you're convinced of the merits of assigning copyright to your Ltd ... how do you actually go about doing this? Is it implicit because you have amazon pay into your business account, or is there a specific procedure authors go through to transfer the copyright?


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## Brookster (Apr 23, 2015)

Just googling and apparently you can use an assignment form, templates are easily found, but the question remains of what to actually do with this?


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## 75845 (Jan 1, 1970)

Your copyright is yours by default unless and until you sign it away in a contract. Copyright has nothing to do with income or sales it is about your rights. You need to speak to a solicitor about how to write a contract between you as an individual and your company, of which you would probably be the sole employee.


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## Brookster (Apr 23, 2015)

In the UK, you're the director of the company and de facto owner. I think it's a case of filling in the assignment form but where this goes I don't know, will phone the government office tomorrow and post an update.


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## Leanne King (Oct 2, 2012)

You don't need to do anything with the assignment, there is no filing. It's exceptionally easy. You take a bit of paper, write out that you the copyright owner assign the copyright to whoever (your company in this case) indefinitely / for a fixed period etc. Then you date and sign it. Job done.

If you want to take the copyright back, do the same in reverse, signing a bit of paper as the director of the company. There's no filing required. Obviously you'll need to change the copyright notices on your books after doing the assignment.

You can download the government's guidelines PDF where it's all explained here.


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## Mark E. Cooper (May 29, 2011)

Leanne King said:


> You don't need to do anything with the assignment, there is no filing. It's exceptionally easy. You take a bit of paper, write out that you the copyright owner assign the copyright to whoever (your company in this case) indefinitely / for a fixed period etc. Then you date and sign it. Job done.
> 
> If you want to take the copyright back, do the same in reverse, signing a bit of paper as the director of the company. There's no filing required. Obviously you'll need to change the copyright notices on your books after doing the assignment.
> 
> You can download the government's guidelines PDF where it's all explained here.


That's refreshing. A government guideline that is actually helpful. However, I wouldn't want to assign copyrights to the company, but license them for my company's use.


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## archaeoroutes (Oct 12, 2014)

Sorry, I'm afraid I still don't get it. As I see it you either:
1. Pay income tax on your book earnings (minus expenses).
2. Set up a company, pay corporation tax on your book earnings (minus expenses) and then pay income tax on your wage from that company.
How does this save you tax?


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## Guest (May 14, 2015)

archaeoroutes said:


> Sorry, I'm afraid I still don't get it. As I see it you either:
> 1. Pay income tax on your book earnings (minus expenses).
> 2. Set up a company, pay corporation tax on your book earnings (minus expenses) and then pay income tax on your wage from that company.
> How does this save you tax?


You need to speak to an accountant. Can I recommend one for you, or can you find one?


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## Mark E. Cooper (May 29, 2011)

archaeoroutes said:


> Sorry, I'm afraid I still don't get it. As I see it you either:
> 1. Pay income tax on your book earnings (minus expenses).
> 2. Set up a company, pay corporation tax on your book earnings (minus expenses) and then pay income tax on your wage from that company.
> How does this save you tax?


It's complicated. See your accountant, BUT, my salary is minimal and is roughly what I'm allowed to earn tax free in the UK. So that's my salary done. Then over and above that (if I need money, and I haven't yet as I live a minimal lifestyle by choice) I could take a substantial sum as a dividend. Not sure what the tax on that would be, but I believe it is a couple of percentage points less than income tax. The company itself pay corporation tax here and that is (2% less I think) than normal income tax.

Lastly, the company only pays tax on profit not turnover (ALA Amazon) so any money the company spends on services (editing, covers, marketing, art, etc) is paid, and what's left over is profit. THAT is taxed.

If you do it without a company, everything you earn is taxed as income (first 10k free) and then you pay all your services out of what's left AFTER you paid tax. SO you're paying expenses and marketing budget out of your NET not you GROSS.

My accountant told me so  And then set up my company and all I needed to make a serious go of this life. It's working so far.


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## archaeoroutes (Oct 12, 2014)

The salary thing is what I don't see. The tax free amount is a total, not per employer. As I already earn over that threshold from my day job anything I pay myself from the book company would also be taxed.
The dividends bit I get - I was just confused by people talking about saving tax on the salary.


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## Mark E. Cooper (May 29, 2011)

archaeoroutes said:


> The salary thing is what I don't see. The tax free amount is a total, not per employer. As I already earn over that threshold from my day job anything I pay myself from the book company would also be taxed.
> The dividends bit I get - I was just confused by people talking about saving tax on the salary.


I'm full time at this now, so I don't have another job. I don't think I would have incorporated while still working "for the man" as they say.


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## Leanne King (Oct 2, 2012)

No NI due on dividends, and although they are taxed as income at the usual rate, you do get a 40% tax credit.


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## Brookster (Apr 23, 2015)

Leanne King said:


> You don't need to do anything with the assignment, there is no filing. It's exceptionally easy. You take a bit of paper, write out that you the copyright owner assign the copyright to whoever (your company in this case) indefinitely / for a fixed period etc. Then you date and sign it. Job done.
> 
> If you want to take the copyright back, do the same in reverse, signing a bit of paper as the director of the company. There's no filing required. Obviously you'll need to change the copyright notices on your books after doing the assignment.
> 
> You can download the government's guidelines PDF where it's all explained here.


Right. See my goal is to leave the copyright to somewhere specific in my will, so I thought 1 / Assign the copyright to my company then 2/ Leave that company in my will. But actually, all I need to do is specify in the will that I bequeath my copyrights etc.


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## Brookster (Apr 23, 2015)

Incorporation means you take the minimum possible as salary, and the rest is paid out as dividends. It's on the dividends where companies gain as they are taxed at a flat rate regardless of size (as a salary you would be paying more if in the higher rate of tax) and also no NI payments on dividends.


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## Guest (May 14, 2015)

Brookster said:


> Right. See my goal is to leave the copyright to somewhere specific in my will, so I thought 1 / Assign the copyright to my company then 2/ Leave that company in my will. But actually, all I need to do is specify in the will that I bequeath my copyrights etc.


It's more complicated than that and professional advice is a must if you intend to make the copyright part of your estate.

If you are collecting royalties up to the time you die, then until probate is finished all royalties become part of your Estate and subject to inheritance tax if you exceed the limit. By assigning the copyright to the company and putting a rider that you're the sole beneficiary of royalties up to 1 minute prior to your death, thereafter they belong to the company, you a) avoid the money being tied up in probate, and b) avoid it being proportioned amongst the rest of your estate. If you family are in need of the money while probate is proceeding and your other assets are frozen, then this can represent an important life-line for them. I'm not saying this is the right thing to do, or that it's the only way to do it. Your decision on how you proceed to protect your assets now, and after your death is your business. That includes payment of royalties and any tax liabilities they might incur.


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## blakebooks (Mar 10, 2012)

You can license the copyright to the UK company. You don't have to transfer it. I believe the license can be for current payment, or deferred, but consult an attorney.


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## 75845 (Jan 1, 1970)

Mark E. Cooper said:


> If you do it without a company, everything you earn is taxed as income (first 10k free) and then you pay all your services out of what's left AFTER you paid tax. SO you're paying expenses and marketing budget out of your NET not you GROSS.
> 
> My accountant told me so


You may have misunderstood your accountant. Self-employed business expenses (even if you still have a PAYE job) come out of tax due on the self-employment so it comes out of the gross for that aspect of self-employment. The only sense in which this is net of tax is that your PAYE or unrelated self-employment (e.g., if you also build luxury beach homes) do not benefit from the expense deductions for your publishing self-employment (well not if opting for cash basis accounting which only came in last year). I recommend to one and all the HMRC online resources and live webinars as I only know this from using those and filling in my own return. I am not an accountant, tax consultant, or solicitor.

Another consideration for lower earners is that there is no personal tax allowance for corporate tax, but equally there is no self-employment national insurance contributions so its win some lose some.

PS, a tip I got from an accountant at LonCon 3 which was not spoken against by the HMRC advisor giving the talk was that if you own your home you should not put your study down as 100% for business use (even if it is) because if you own the property and sell it that would be liable for Capital Gains Tax. Again speak to your own accountant before following this advice.


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## Mark E. Cooper (May 29, 2011)

Mercia McMahon said:


> You may have misunderstood your accountant. Self-employed business expenses (even if you still have a PAYE job) come out of tax due on the self-employment so it comes out of the gross for that aspect of self-employment. The only sense in which this is net of tax is that your PAYE or unrelated self-employment (e.g., if you also build luxury beach homes) do not benefit from the expense deductions for your publishing self-employment (well not if opting for cash basis accounting which only came in last year). I recommend to one and all the HMRC online resources and live webinars as I only know this from using those and filling in my own return. I am not an accountant, tax consultant, or solicitor.
> 
> Another consideration for lower earners is that there is no personal tax allowance for corporate tax, but equally there is no self-employment national insurance contributions so its win some lose some.
> 
> PS, a tip I got from an accountant at LonCon 3 which was not spoken against by the HMRC advisor giving the talk was that if you own your home you should not put your study down as 100% for business use (even if it is) because if you own the property and sell it that would be liable for Capital Gains Tax. Again speak to your own accountant before following this advice.


As I said earlier, I'm talking from a "No other job POV" so ALL income is self employed income, but it can be channeled through a company or not through a company. I did it through a company when I left my day job, but I could have done it earlier or not at all. I don't think I misunderstood my accountant, but regardless it all seems to be working fine. I do own my house, but I rent the company a room with proper invoices etc.


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## Brookster (Apr 23, 2015)

Rubens4tune said:


> It's more complicated than that and professional advice is a must if you intend to make the copyright part of your estate.
> 
> If you are collecting royalties up to the time you die, then until probate is finished all royalties become part of your Estate and subject to inheritance tax if you exceed the limit. By assigning the copyright to the company and putting a rider that you're the sole beneficiary of royalties up to 1 minute prior to your death, thereafter they belong to the company, you a) avoid the money being tied up in probate, and b) avoid it being proportioned amongst the rest of your estate. If you family are in need of the money while probate is proceeding and your other assets are frozen, then this can represent an important life-line for them. I'm not saying this is the right thing to do, or that it's the only way to do it. Your decision on how you proceed to protect your assets now, and after your death is your business. That includes payment of royalties and any tax liabilities they might incur.


Excellent point, thanks


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## Brookster (Apr 23, 2015)

Rubens4tune said:


> The author can assign copyright to the company (at no cost, but give it a nominal value) and assign the royalties to themselves for life. If you make your spouse/children directors and give them shares in the company, your death means your books and the royalties are safeguarded and so are your family (money wise).
> 
> There is very little risk of assets being lost for any reason unless you run a loose financial ship, in fact a company can protect your assets better than you can. If you go personally bankrupt there is no limit on liability. a Ltd company is 'limited' liability. you can be a personal bankrupt and feasibly still keep the limited company (get an accountant to sort that one). There is no requirement to be an armchair lawyer, its not a lawyers job, its purely an accounting function. No contract needed, an assignment (a letter will do) signed by you is sufficient, then ensure you change the copyright notice on all of your books -- it applies from the moment you assign it, which means all prior sales are yours, all subsequent sales are the company's.
> 
> ...


If you don't mind me asking, how did you actually transfer copyright? With the gov assignment form?

I phoned Concept House this morning and they simply didn't know! The best they could do was refer me to the Law Society whereupon I would track down a copyright lawyer, unbelievable lol


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