I’m a writer and I’ve won a prize. Is it taxable?
This a question that we’re often asked.
Unfortunately, as with so many tax questions, the answer isn’t a straight yes or no… it’s a maybe.
There are many prizes and awards open to authors and other creatives and entering competitions or seeking awards is a normal part of these professions and a good way to obtain extra income from their work. Such prizes are usually taxable.
However, there are exceptions. When a prize is unsolicited, and awarded as a mark of honour, distinction or public esteem in recognition of outstanding achievement in a particular field, it won’t be taxable.
So, if your publisher or agent enters you for a competition without your knowledge or consent, any prize money received should not be taxable.
If your prize is taxable, you’ll be able to claim any costs of the competition entry against your winnings. A small silver-lining!
We’d recommend you contact us when you receive your prize (before you spend it all) and we can help you determine whether you need to account for any future tax bills that may arise.