Graphic Designers vs Illustrators — Different Tax Treatments Explained

The Accounted Business Team·1 March 2026·8 min read

Graphic designers and illustrators often get lumped together — they're both creative, both freelance-heavy, and both spend a lot of time in front of screens. But when it comes to tax, there are some genuinely important differences worth understanding. From how you earn (project fees vs royalties) to what you can claim, the two professions aren't quite as interchangeable as they might seem.

This guide breaks down the key tax differences between graphic designers and illustrators in the UK for the 2025/26 tax year, along with the areas where the rules are the same. If you're a designer, an illustrator, or someone who does a bit of both, read on.

The Basics — What's the Same

Let's start with the common ground, because there's a lot of it.

Both graphic designers and illustrators working for themselves need to:

Register as self-employed with HMRC
File a Self Assessment tax return each year
Pay income tax and National Insurance on their profits
Keep records of all income and expenses

The tax rates are identical for both professions:

Income Tax for 2025/26

Personal allowance: £12,570 tax-free
Basic rate: 20% on profits between £12,571 and £50,270
Higher rate: 40% on profits above £50,270

National Insurance

Class 2 NI: £3.45 per week (£179.40 per year)
Class 4 NI: 6% on profits between £12,570 and £50,270

For a full breakdown of how these work, see our guide on how much tax sole traders pay.

So far, so identical. But the differences start to emerge when we look at how income is structured and how expenses vary between the two professions.

The Big Difference — Royalties and Licensing

This is where things diverge most significantly. Graphic designers typically earn project fees — a client commissions a logo, a website, or a branding package, and the designer invoices for the work. The income is straightforward trading income.

Illustrators, on the other hand, often earn through a combination of:

Commission fees — direct payment for creating an illustration
Royalties — ongoing payments based on sales of products featuring their work
Licensing fees — payments for the right to use their illustrations in specific contexts

How Are Royalties Taxed?

Royalties are taxed as trading income if you're a professional illustrator — they're part of your self-employed earnings. You declare them on your Self Assessment return alongside your other income, and they're subject to the same income tax and NI rates.

However, there's a quirk. If a publisher or client pays you royalties, they may deduct basic rate tax (20%) at source before paying you. This is relatively common with book royalties. You then declare the gross amount on your tax return and claim credit for the tax already deducted. You won't be taxed twice — but you do need to handle the paperwork correctly.

International Royalties

If you receive royalties from overseas (common for illustrators whose work appears in international publications or on global platforms), you may face withholding tax in the source country. The UK has double taxation treaties with many countries, which can reduce or eliminate this. You'll usually need to complete a form to claim the treaty benefit — and you should declare the income on your UK tax return, claiming a credit for any foreign tax paid.

Graphic designers rarely deal with royalty income, so this complexity simply doesn't arise for most of them.

Expenses — Where They Overlap and Diverge

Both professions share many common expenses, but there are some notable differences.

Shared Expenses

Both graphic designers and illustrators can claim:

Technology: Computer, monitor, graphics tablet, stylus, printer
Software: Adobe Creative Suite, Procreate, Affinity Designer, Figma
Home office costs: Rent/mortgage proportion, utilities, broadband — see our work from home expenses guide
Marketing: Website, portfolio hosting, social media advertising
Professional development: Courses, workshops, conferences
Professional services: Accountancy, legal fees, insurance
Travel: Client meetings, events, networking — see our mileage guide

Expenses More Common to Graphic Designers

Stock photography and asset subscriptions (Shutterstock, Adobe Stock, Envato)
Font licences (commercial use can be expensive)
Prototyping and testing tools (InVision, Marvel, Webflow)
Print production costs (for proofing physical designs)
UX research tools (if working in UX/UI design)

Expenses More Common to Illustrators

Art materials — pencils, paints, inks, markers, paper, sketchbooks
Printing costs — for art prints, giclée prints, postcards
Framing and mounting — for exhibitions and sales
Exhibition costs — gallery hire, installation, invitations
Agent or representative fees — many illustrators work with agents who take a commission (typically 25-30%)
Postage and packaging — for sending original artwork or prints
Model hire — for life drawing or reference photography

Agent commissions are worth highlighting. If you work with an illustration agent, their commission is deducted from your earnings before you receive them. You should declare your gross income (before the agent's cut) and then claim the commission as a business expense. This is important — it keeps your records accurate and ensures you're not accidentally underreporting your income.

For the full list of claimable expenses, see our complete guide to sole trader expenses. We also have a dedicated tax guide for graphic designers if you want to go deeper.

Copyright and Intellectual Property

This is another area where the two professions diverge in practice, even though the legal framework is similar.

Graphic Designers

In most graphic design work, the copyright in the finished design is assigned to the client as part of the project agreement. The designer creates a logo, hands over the files, and that's the end of the story. There's no ongoing income from that piece of work.

The cost of creating the work (your time, software, equipment) is covered by the project fee and claimed as expenses in that tax year.

Illustrators

Illustrators more commonly retain copyright in their work and license it for specific uses. This creates the possibility of earning from the same piece of work multiple times — through licensing, royalties, and print sales.

From a tax perspective, this means:

Licensing income is declared in the year it's received
Royalty income is declared in the year it's received
Print sales are declared as trading income
The original creation costs (materials, time) were claimed as expenses when incurred

This creates a more complex income pattern, with revenue potentially arriving years after the work was created. Good record-keeping is essential — and this is where using bookkeeping software like Accounted really helps. Penny can track and categorise income from multiple sources, so you always know where your money is coming from.

Averaging of Profits

Here's something that's genuinely unique to certain creative professions. Authors and creative artists (which can include illustrators) may be able to use a special tax relief called averaging of profits if their income fluctuates significantly from year to year.

Under profit averaging, you can average your profits over two consecutive tax years. This can reduce your tax bill if you have one very good year and one quiet year, because it smooths out the peaks and troughs that would otherwise push you into higher tax brackets.

To qualify, the difference between the two years' profits must be at least 30% of the higher year's profit. This relief is claimed on your tax return.

Most graphic designers won't qualify for this (their work tends to be more evenly distributed), but illustrators with lumpy income from book deals or large commissions may benefit significantly.

VAT Considerations

The VAT registration threshold is £90,000 in taxable turnover for both professions. But there are some differences in how VAT applies:

Graphic Design Services

Graphic design services supplied to UK businesses are standard-rated at 20%. If you exceed the threshold, you charge VAT on your invoices.

Illustration and Art Sales

Most illustration services are also standard-rated. However, the sale of original artwork (paintings, drawings, sculptures) by the artist or their estate can qualify for the reduced VAT rate of 5% in certain circumstances — though this is a niche area and most commercial illustration won't qualify.

If you sell prints, they're standard-rated.

For international work, both designers and illustrators need to consider the place of supply rules. Services provided to business clients outside the UK are generally outside the scope of UK VAT. Our VAT registration guide explains the basics.

Record-Keeping Differences

While both professions need to maintain good records, illustrators typically have more complex record-keeping requirements because of:

Multiple income streams (commissions, royalties, licensing, print sales)
International income and potential withholding tax
Stock of prints and products
Agent statements to reconcile

A dedicated bookkeeping system is essential for managing this complexity. Whether you're tracking a single project fee or reconciling royalty statements from three different publishers, having everything in one place makes your Self Assessment return dramatically easier.

Which Profession Has the Better Tax Deal?

Neither, really. Both professions are taxed on profit at the same rates. But illustrators have some potential advantages:

Profit averaging can smooth out tax bills in uneven years
Ongoing royalty income from past work provides passive revenue
Art materials can generate healthy expense claims

And some potential disadvantages:

More complex record-keeping with multiple income streams
International tax complications from foreign royalties
Withholding tax on royalties requires careful management

Graphic designers tend to have simpler tax affairs but less flexibility in how their income is structured.

Wrapping Up

Whether you're a graphic designer, an illustrator, or a hybrid of both, the fundamentals are the same: register with HMRC, keep thorough records, claim all your legitimate expenses, and set money aside for tax. The differences lie in the details — royalties, licensing, profit averaging, and the nature of your expenses. Understanding these nuances means you pay exactly what you owe and not a penny more.

Accounted helps UK sole traders stay on top of their bookkeeping and tax. Start your free 30-day trial at getaccounted.co.uk

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