Awards to Inventors (ATI) Income Tax Question

by Steven
(Watford, Hertfordshire, UK)

Awards to Inventors (ATI) Income Tax Question

What are the personal tax and NI liabilities for ATI payments received from a former employer?

These ATI payments are directly linked to royalties received by the former employer from 3rd party collaborators, where I (and others) was named inventors on patents directly linked to the commercialization of the product.

The ATI payments are defined by a strict formula and are capped. Whilst I was an employee of the company, I received ATI payments (which were non-consolidated and non-pensionable) in the same way that I received annual bonuses, i.e. I paid tax and NI.

Now that I am retired, I wondered whether this tax/NI treatment was still valid? If it is, will my ex-employer have to pay employers NI contributions as well?

Thanks, Steve

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Songwriter Switching Careers

by Dexter
(Nashville, TN)

I've been a professional songwriter for the last fifteen years. Due to the fact that people have all but quit purchasing the music they obtain, after several years of plummeting royalties I had to make a career change.

So a year ago I invested in some video equipment and starting doing full-time scripting, producing, directing and editing work. At that point I immediately went from several songwriting sessions a week, to only participating in one songwriting session every two or three months. At the same time, I've been spending anywhere from 40-100 hours per week on video work.

The song catalog I built up over those years continues to generate a modest royalty stream, though.

So my question is, at what point can I stop paying self-employment taxes on songwriting royalties since it's no longer a business I'm pursuing? Or, since I reported songwriting income for 15 years on schedule C's, will I never be able to reclassify those income streams as hobby income rather than a business?

Thanks!

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