A Song and Dance as Class 1 Becomes Classes 2 and 4: NI for Entertainers

HMRC has published the outcome of its consultation over a change in the National Insurance status of entertainers (persons employed as actors, singers or musicians).

At present, entertainers enjoy separate treatment, in that they are all deemed for NI purposes to be “employed”, even if they are taxed as self-employed. The reason for this is to provide access for entertainers to earnings-related contributory benefits (such as Job Seekers Allowance) for which they might not qualify based only on their self-employed NI contributions, particularly if their employment is intermittent. The downside for employers is that their costs are increased by having to pay employers’ NIC on the sums paid to entertainers.

HMRC has concluded that the overwhelming majority of those who responded to its invitation to submit views endorsed HMRC’s preferred option, which is that entertainers should be treated for NI purposes as most other self-employed mortals and should pay Class 2 and Class 4 NICs.

The change, which cannot come soon enough for film, television and theatre producers, is due to come into effect on 6 April 2014 but the draft statutory instrument intended to bring the change into effect does not shed any light on the treatment of additional use payments received on or after 6 April 2014 in respect of performances rendered before 6 April 2014.

The full consultation can be seen here.

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