INTERIOR DESIGNERS

Design fees are generally taxed where your business is resident and where the work creates a taxable presence. A UK studio pays Corporation Tax or, if a sole trader, Income Tax on its worldwide profits, while US-based projects can create US filing obligations if you have a permanent establishment there. The US-UK tax treaty helps allocate profit and avoid the same fee being taxed twice.

VAT treatment depends on whether you are supplying services or goods and where the customer belongs. Design services to a business client abroad are often outside the scope of UK VAT, but services connected to UK land or property can be taxed where the property sits. FF&E supplied as goods follows different rules. Because land-related services are a special case, confirm each project’s VAT position individually.

When you buy furniture, fixtures, and equipment and resell them to clients with a markup, that markup is trading income and the goods are usually subject to VAT or sales tax. In the US, sales and use tax rules vary by state and by whether you are treated as a reseller. Keeping procurement separate from design fees in your records makes the tax treatment and margins far clearer.

Expenses incurred wholly and exclusively for the business are generally deductible, including studio rent, professional software, sample materials, and project-related travel. In the UK these reduce your taxable profit; in the US the IRS allows ordinary and necessary business expenses. Personal-use elements must be excluded, and international travel needs a clear business purpose. Good contemporaneous records support the claim.

The choice between sole trader, partnership, UK limited company, or a US LLC depends on your income level, liability exposure, and whether you operate on both sides of the Atlantic. Incorporation can offer tax planning and protection but adds filing duties, and a foreign entity can create cross-border transfer pricing and payroll issues. We model the options before you commit so the structure fits your practice.

Income from licensing designs, product collaborations, or intellectual property is generally taxable, and cross-border royalties can face withholding at source. The US-UK tax treaty may reduce withholding where a valid treaty claim is filed. Whether income is a royalty, a service fee, or a capital receipt affects the rate and reporting, so licensing agreements should be reviewed for their tax wording before signing.