Tuesday, 21 June 2016

What the EU Referendum means for authors - Katherine Roberts

On Thursday, UK voters will be making a decision to REMAIN or LEAVE ("BREXIT") the European Union. I'm writing this post a little ahead of time, but already I have been bombarded by so many different 'facts' from both camps (mostly speculation and educated guesses, it seems) that I am becoming quite confused. So without trying to change your mind in any way at this late stage, I'm writing this post to try to decide what the referendum means for authors like me.

'Fact' 1: Authors are self-employed. This means we do not benefit from any kind of minimum wage, holiday or sick pay, workplace pension, or other employee sweeteners. So far I've heard that Brexit might cut wages by £38 per week, but also that Brexit could mean a rise in the wages of low-paid workers. Both of these headlines seem to be based on educated guesses working from Britain's GDP (Gross Domestic Product) forecasts, and as far as I can work out neither outcome will directly affect the self-employed author's income. Combining the rather scary "households will be worse off by £4,300 a year" forecast (also based on GDP forecasts) with the median average income from the latest survey of UK author earnings (£11,000) would leave your average single-income author household with just £6,700 a year, but I think that is misleading since the first figure comes from the UK's GDP divided by the number of households, and I am not sure how much of the country's GDP finds its way into authors' pockets anyway... anyone know?

'Fact' 2: Authors are treated like farmers for tax purposes, in that we are allowed to average our profits over two years under HMRC's Literary Averaging rules to help smooth out the typical author's unpredictable and see-sawing income pattern. While the EU referendum vote should not directly affect the UK's tax averaging rules, it's interesting to note that the National Farmers' Union appears to be firmly in the REMAIN camp. So far, I have not seen any official Society of Authors advice on the matter*, although it appears they are campaigning to ensure that the vote does not affect current discussions about copyright and the Digital Single Market, which is apparently going ahead whether we remain in or leave the EU. Unlike farmers, authors do not get subsidies from the EU, so the decision is not so clear cut for us.

* EDITED 28/6/16: Following the Brexit result, the Society of Authors issued this statement to their members.

'Fact' 3: The majority of electric authors' royalties - and some of traditionally published authors' royalties - come from US-based internet retailers such as amazon. This means we get paid after the deduction of US withholding tax or (for ebooks sold in Europe) European VAT depending on the country of sale. The UK has a double taxation agreement with the US so we can apply to get our royalties paid with zero withholding, but there is no way of avoiding VAT on European ebook sales, except to campaign for the zero-rated status enjoyed by print books. European VAT used to be a flat rate for all European ebook sales, but was changed in 2015 to apply to the country of sale, creating something of a nightmare for authors selling ebooks direct from their own websites. Since VAT is a European directive, we could in theory be totally VAT free if we vote to leave the EU, which would mean no VAT on UK ebook sales... or we might not... if you can make more sense of this VAT article as it applies to authors, then let me know! However, depending on the type of trade agreement the government negotiates with the EU following a Brexit, we'd still need pay VAT on our sales to EU countries as we do now, so really this is an export issue - see below.

'Fact' 4: Authors get a proportion of their income from exports in the form of foreign rights deals with overseas publishers, as well as English language book sales in other countries as mentioned above, so a trade deal with Europe would on the surface seem a good thing for us. However, the majority of my overseas income has come from US sales, and my first foreign language rights sale was to Korea for my book The Great Pyramid Robbery... neither of these two countries are in the EU, or ever likely to be as far as I can see, so I am wondering how much Brexit would in fact affect authors' exports? The most important issue for export of rights to an overseas publisher seems to be withholding tax - I did have taxes withheld by Korea, but it is possible to offset withheld tax against UK tax on your annual return, and we already have a double taxation agreement with America.

'Fact' 5: Authors of print books borrowed from public libraries also receive income from the UK Government in the form of Public Lending Right (PLR). This annual payment has a cap (currently £6,600) for high-earning authors, but can form a significant proportion of a lower-earning author's income, particularly children's authors. However, library closures in recent years and the rise of volunteer-run libraries (which are outside the PLR system) have meant a fall in PLR across the board. Would Brexit mean more government funds to keep libraries open, maybe even to re-open the ones we've lost and some brand new ones too? It would be nice to think so! However, realistically I expect any spare cash from a Brexit vote to be quickly swallowed up by other ailing public services such as the NHS.

'Fact' 6: Low-earning UK authors can apply for working tax credits and other benefits. All authors are also eligible for a Government pension when they reach state pension age. In theory a Brexit vote with fewer migrants from the EU claiming their share should mean more money available for us in time of need... except it might not. All I know is that my pension age has already risen by 7 years (to a rather depressing 67 the last time I checked) without any help from Brexit, leaving a worrying hole in my long-term financial planing, and while working tax credits have helped to keep me afloat in recent years, it is not clear whether these will continue to be paid to low-earning authors under the new Universal Tax Credit rules.

'Fact' 7: House prices will rise and fall, regardless. Apart from the average wage and average household income forecasts based on the GDP already mentioned in 1, we have alarming headlines such as house prices may fall by as much as 18%  after a Brexit vote - which might be cause for celebration if you're a first time buyer, so probably depends if you're the renting type of author or equity-rich type of author. I own my house, but if house prices fall and I want to move then they'll all fall, so no real effect for me either way. The only time this would really bother me is if I need to do equity release in future (and with rising pension ages, this could be a real possibility), or if I win the lottery next week and immediately invest it in a second property. However, house prices crashed fairly dramatically in 1990, and again in 2007 with no help at all from Brexit, and the Daily Mail is predicting as much as a 30% fall regardless of the outcome of the referendum.

'Fact' 8: The last European Referendum in the UK was held in June 1975, when the people of Britain voted to join what was then the Common Market. I was too young to vote in that referendum, but it's clear the Europe my parents voted for in 1975 is not the same Europe we are voting for in 2016. Also, it's important to understand that a REMAIN vote this time will keep things as they are now, whereas in 1975 a JOIN vote meant big change, and changes are scary even when they are positive. An interesting way to look at this 2016 vote might be to turn the question on its head: if the vote on June 23rd was to JOIN or STAY OUT of the current European Union, what would you decide is best for Britain?

'Fact' 9: It's not about politics... although the political parties have, of course, hotly debated the vote and are all championing one camp or the other. From what I gather, the latest line up looks like this:

Conservative: Divided (Prime Minister: REMAIN; Boris Johnson: LEAVE)
Labour: Divided
Liberal Democrat: REMAIN
UKIP: LEAVE
SNP: REMAIN
Green: Divided
Plaid Cymru: REMAIN
Irish parties: mostly REMAIN; Democratic Unionist LEAVE

Other countries also have an opinion on what Britain should do:
America: REMAIN... or else you'll be at the back of the queue for trade.
Europe: REMAIN... we need your cash.

So how should authors vote on Thursday? I think I've made up my mind now, but part of the reason this decision has proved so difficult for me is that an author's circumstances can change dramatically from one year to the next. And of course I am not 'just' an author. I am a daughter of elderly parents who both lived through the last war, the sister of an ex-Naval officer, and although I don't have any children to worry about, that doesn't stop me from worrying about everyone else's. I am also aware how important it is to view this vote as a long term commitment for my country, because I'm pretty sure there won't be another European referendum any time soon, whatever the outcome of this one.

In other words, we're talking about a decision we're likely to have to live with for the next 40 years (based on the period since the last referendum on Europe). Happy voting!
*

Katherine Roberts has a first class degree in Mathematics (which might explain her nerdy need to analyse things at great length), and won the Branford Boase Award for her first book SONG QUEST (which makes her an author). She writes fantasy fiction for young readers with a focus on legend and myth and historical fiction for young adults under the name Katherine A Roberts.

Her latest book is the long-awaited sequel to her 2001 novel SPELLFALL:



Find out more at www.katherineroberts.co.uk

6 comments:

Lee said...

Heheh, everyone seems terrified of commenting. Now what does that say about the sort of writers we've become?

Mari Biella said...

A useful analysis, Katherine. The Referendum debate has, sadly, been marked by a dearth of facts and a tendency to hysteria - on both sides. Perhaps I have a slightly different perspective, being based largely in Italy. Italy was once one of the most pro-EU of member states, but financial insecurity and youth unemployment levels have caused enthusiasm to wane somewhat in recent years. (I like the way you turned the question on its head in "Fact" 8, too.)

Nick Green said...

Hey everyone - it's very, very simple.

David Cameron and Jeremy Corbyn both think we should remain.

When those two agree on something, then to take any other view is to be way off in the outer darkness. When those two agree, then be afraid, very afraid.

Nick Green said...

p.s. There has not been a 'dearth of facts' on the Remain side. Go and Google some. The internet is bursting with independent experts all saying that it would be economic and political suicide for the UK to leave.

Catherine Czerkawska said...

I'm with Nick! Besides, the thought of Boris or Gove as PM gives me nightmares.

JO said...

I'm remaining, too. It's hard to disentangle anything from the soundbites - but I studied history (decades ago), and have seen the pattern of wars in Western Europe, often over the silliest things, every since the beginning of recorded history. We've had the longest period of peace in Western Europe since forever - so do we want to stay at the table and talk about our differences, or do we want to sit in the corner and refuse to join in, knowing that the rest of Europe will carry on making decisions that affect us but we have no input.