On the 15th May HMRC issued a consultation document ‘National Insurance and Self-employed Entertainers‘ comments are invited until 6th August 2013. The object of the consultation is to simplify National Insurance for Entertainers and for the recommendations to be rolled out from 6th April 2014.
The consultation is relevant to:
- Actors
- Singers
- Musicians
- Performers
Its not relevant to individual employed under a ‘contract of service’ as they are employed.
Since 1998 self employed entertainers have been deemed to be employed earners for National Insurance purposes in order that they could access earnings related contributory benefits. This requires contributions from the entertainer and secondary contributions from the producer of the entertainment.
But its complicated because entertainers often receive ‘additional use payments’ such as royalties, the payments can be complex and paid years after the original engagement.
In addition there is evidence that the 13.8% employers NI has made some producers look outside of the UK for entertainers.
Some amendments to the rules were made in 2003 replacing the ‘wholly or mainly by way of salary’ with a revised definition of ‘salary’
“Salary“means payments:
(a) made for services rendered;
(b) paid under a contract for services;
(c) where there is more than one payment, payable at a specific period or interval;
and
(d) computed by reference to the amount of time for which work has been performed.
But this hasn’t help, computed by reference to time is too broad and entertainers don’t work on this basis.
So far HMRC have sought the views of groups representing 80,000 entertainers and 23,000 engagers.
Currently there are two options within the Class 1 regime for amending legislation which HMRC believe would simplify the NICs treatment of entertainers’ earnings:
- Option 1: Provide for separate secondary contributors for NICs due on Initial Performance Payments (IPPs) and NICs due on Additional Use Payments (AUPs);
or
- Option 2: Provide that IPPs are subject to Class 1 NICs, but AUPs are subject to Class 4 NICs
Alternatively all of the entertainers earnings could be moved into class 2 and class 4 NI.
Do you have any suggestions for HMRC?
steve@bicknells.net
