What Records Does a Band Need to Keep? A UK Tax Guide

Starting a band often means focusing on writing music, rehearsing and getting gigs. Tax and bookkeeping usually aren't top of the priority list.

However, from the moment your band starts earning money, it's important to keep good records. Even if you're only playing occasional gigs or selling a small amount of merchandise, treating the band like a business from day one can save a great deal of stress later.

In this guide, we'll explain what records your band should keep, the different ways a band can be structured for tax purposes, and why a simple written agreement between members is just as important as your bookkeeping.

Is Your Band Carrying on a Business?

The first questions to ask are:

• Is there a business activity taking place?

• Who is actually earning the income?

If your band is being paid for performances, selling merchandise, receiving royalties or earning other music-related income, this is usually considered a trading activity.

How that income is reported depends on the legal structure of the band.

How Can a Band Be Structured?

There isn't one "correct" structure for every band. The most suitable option depends on how you're operating and how established the band has become.

Option 1: Each Member Reports Their Own Share

Many new bands begin informally.

Each member simply reports their share of the band's profits or losses through their own tax return.

This often works where:

• There is no separate legal entity

• Income and expenses are shared informally

• Profits or losses are divided between members

Although this approach is straightforward, we strongly recommend having a written agreement covering:

• How income and expenses are shared

• How profits or losses are divided

• Who can authorise spending

• Who owns equipment bought using band funds

• What happens if someone leaves the band

Without something in writing, misunderstandings can quickly arise.

Option 2: A Partnership

Where several members contribute to the band and money is paid into a central band account, a partnership is often a cleaner solution.

A partnership isn't normally taxed separately, but it does submit a Partnership Tax Return. Each member then reports their own share of the profit or loss.

This approach usually works well where:

• Several members are involved

• Income is received into one account

• Expenses are paid centrally

• Profits and losses are shared

A written partnership agreement is highly recommended.

Option 3: A Limited Company

As a band grows, a limited company may become appropriate.

The company receives the income, pays the expenses and pays Corporation Tax on its profits. Members may then receive salaries, directors' fees or dividends, depending on the circumstances.

While a company can offer advantages, it also brings significantly more administration, including:

• Companies House filings

• Corporation Tax returns

• payroll requirements where applicable

• more formal rules around taking money from the business

For many smaller bands, this level of administration simply isn't necessary in the early stages.

There Isn't One Simple Tax Threshold

One of the biggest misconceptions is that there's a single income figure where tax suddenly becomes payable.

In reality, different taxes have different rules.

Income Tax

Income Tax is based on profit, not turnover.

To calculate profit, take:

Total band income

less

Allowable business expenses

If there's a profit, it may need to be reported by the relevant member(s).

If there's a loss, there may be no Income Tax to pay, but records should still be kept and reporting may still be be required depending on the band's structure and each member's wider tax position.

VAT

VAT works differently.

It looks at taxable turnover, not profit.

A business will normally need to register for VAT once taxable turnover exceeds £90,000 in any rolling 12-month period.

Income that usually counts towards this includes:

• Performance fees

• Merchandise sales

• Other taxable income

Making Tax Digital for Income Tax (MTDfIT)

Making Tax Digital for Income Tax is also based on qualifying income rather than profit.

The requirement is being introduced in stages, with different income thresholds applying over the coming years:

• Qualifying income over £50,000 in the 2024/25 tax year – applied from 6th April 2026.

• Qualifying income over £30,000 in the 2025/26 tax year – applies from 6th April 2027.

• Qualifying income over £20,000 in the 2026/27 tax year – applies from 6th April 2028.

If your band operates as an unincorporated business (for example, as individual sole traders or a partnership), each member should understand how these thresholds apply to their own circumstances. Good record keeping from the outset will make the transition to MTD much easier if your qualifying income reaches one of these thresholds.

What Records Should a Band Keep?

The simplest approach is to treat your band like a small business from day one.

Income Records

Keep records of:

• Gig fees

• Merchandise sales

• Streaming income

• Download income

• Royalties

• Appearance fees

• Sponsorship income

• Promotional income

• Refunds received

• Cash sales

Expense Records

Keep records of:

• Rehearsal room hire

• Recording costs

• Production costs

• Mixing and mastering

• Equipment purchases

• Repairs and replacements

• Videographers

• Photographers

• Website costs

• Social media promotion

• Travel to gigs

• Travel to rehearsals

• Merchandise production

• Commissions paid to agents or promoters

• Insurance

• Bank charges

The Minimum Bookkeeping System We Recommend

You don't need complicated accounting software to begin.

At a minimum, keep:

• One spreadsheet or bookkeeping app

• One income tab

• One expenses tab

• One record showing how profits or losses are shared between members

You should also keep copies of:

• Invoices

• Receipts

• Contracts

• Ticketing statements

• Merchandise sales records

• Bank statements

Good records make preparing tax returns significantly easier and provide valuable evidence if HMRC ever asks questions.

Which Structure Is Right for Your Band?

Informal Arrangement

Best for: Very early-stage bands with low income and a high level of trust.

Advantages

• Simple

• Inexpensive

• Flexible

• No Companies House requirements

Disadvantages

• Ownership can become unclear

• Disputes are more likely

• One member often controls the bank account

• Members remain personally responsible

Partnership

Best for: Bands with several members sharing income and expenses.

Advantages

• Clearer structure

• Easier bookkeeping

• Profits and losses can be allocated

• One set of partnership accounts

Disadvantages

• Additional tax administration

• Members usually remain personally liable

• Partnership agreement strongly recommended

Limited Company

Best for: Bands with growing profits, larger contracts or plans to retain profits in the business.

Advantages

• Limited liability in many situations

• Clearer separation between personal and business finances

• Professional appearance

• Defined ownership through shares

Disadvantages

• Greater administration

• Corporation Tax and Companies House obligations

• Payroll may be required

• Taking money from the company is more formal

Don't Forget the Agreement Between Band Members

Many problems experienced by bands aren't actually tax problems.

They're communication problems.

Before income starts increasing, discuss questions such as:

• Will profits be split equally or according to contribution?

• Are songwriting royalties treated differently from performance income?

• Who owns the merchandise stock?

• Who owns equipment purchased using band funds?

• What happens if a member leaves?

• Can someone be repaid if they've personally funded expenses?

• Who has authority to approve spending?

A simple written agreement can prevent misunderstandings and protect relationships.

Final Thoughts

There isn't a one-size-fits-all approach to band accounting.

The right structure depends on how your band operates, how income is shared and where you expect the business to go in the future.

Whatever structure you choose, good record keeping is essential from the very beginning. It will make tax reporting much easier, help avoid disputes between members and ensure you're prepared as your music career grows.

If you're unsure whether your band should operate informally, as a partnership or through a limited company, or you'd like advice on the tax implications of your particular situation, we'd be happy to help.