Here’s a blogpost with the important and very short bit at the top. Then lots of explanation which most people won’t find very interesting, but here it is anyway for those who will. Then the important very short bit repeated at the bottom.
Most acting and stage management engagements are self-employment, not employment, for the purposes of your self-assessment tax return.
Sometimes this is completely obvious. You do a day’s filming, or an hour’s voiceover.
Occasionally it’s equally obvious that you are on PAYE employment – a year in a West End musical, for example.
Many other contracts are less obvious, especially so-called ‘Equity’ contracts, an often-used shorthand meaning short- or medium-term engagements, often in subsidised or commercial theatre and often lasting a few weeks or a couple of months.
Before 1996, Equity and HMRC had a long history of arguing about the status of these contracts. Equity wanted them to be regarded as freelance work, and HMRC didn’t. Eventually a test case went all the way to the highest court in the land (actors’ tax trivia: the late Alec McCowen and Sam West were the actors used as the test cases) and Equity won. Actors are freelancers, except in a narrow set of circumstances.
Unfortunately more confusion has persisted, until 2014 with a good reason – HMRC tried to ‘fudge’ the issue of National Insurance contributions. They asked theatres and producers to continue collecting NIC, as if they were employers – even though they weren’t.
In 2014 that practice thankfully got reversed. Now, actors should pay their NIC as Class 2 and Class 4 through the self-assessment tax return, just like other freelancers.
There’s still confusion out there, though, largely for three reasons:
HMRC have consistently failed to give theatres and producers clear advice about how to report (or not report) these earnings. It often goes wrong, which means that earnings that should be allocated to self-employment land automatically in the Employment section, pre-populated, in people’s tax returns. If that happens, it’s wrong – but you need knowledge and confidence to be sure that you should change it.
Equity have over time achieved certain benefits for actors on Equity contracts – pension contributions, holiday pay etc – which look a bit like the facets of an employment contract, even though it remains a self-employment contract.
It’s also a stipulation of the contract that actors/SMs should receive a weekly payslip when on the contract, which causes some theatres and producers to bundle up the admin of such payslips with the admin for their regular, PAYE payroll.
So when you come to fill in your annual self-assessment tax return, be sure that such earnings are not in the Employment section. You will know that they should not be because tax and NIC was not deducted by the theatre/producer. Move these earnings to your Self-employment calculations.
If you don’t do this, your tax and NIC won’t be right, and – although nobody could have foreseen this problem – you won’t be eligible for state aid for the self-employed, if it’s ever needed again as it has been in the Spring of 2020 with the HMRC SEISS payments.
I am representing a number of actors and stage managers in a group claim against HMRC because they have been unfairly denied a SEISS payment, owing to this earlier error. Wish them luck!
As I was saying:
Most acting and stage management engagements are self-employment, not employment, for the purposes of your self-assessment tax return.
We are necessarily only making short and general points here – if you are in any doubt about your particular circumstances, call us for free advice on 08000 487626, message us on Instagram @accounting4actors or email hello@accounting4actors.co.uk for advice on tax accounting for actors and others working in the creative industries. .
Please get in touch with us if you have any questions at all. We’ll chat to you about your affairs with no obligation on you whatsoever.
Please visit www.accounting4actors.co.uk and find out about tax for actors, accounting for creative and cultural industry professionals, actors’ tax returns, and all accounting for creatives.