Advice on specific Activities

 

Much of our advice covers all entertainers and sports persons but some activity-specific advice can be helpful. We have therefore prepared pages on:-

If you do not fall in any of these categories but feel you need specific help refer to the Foreign Entertainers Unit section for contact details.

Film & TV

We hope this page, as well as Frequently asked questions, will clear up any misconceptions or answer any queries you might have about the impact of the legislation on the UK film and television industry. If not, we will be happy to deal with any points addressed to us by phone, fax or e- mail.

Q. Are only non-U.K. resident actors affected?

A. No. Anyone who does any work in the U.K. "in front of the camera" (including as a voice-over artist, stand-in, stunt person, puppeteer etc.) will have a U.K. tax liability and withholding tax should be deducted from payments for any such work.

Q. If my services are provided through a loan-out corporation or personal service company, can I avoid the withholding tax deduction?

A. No. The withholding tax rules apply whether you provide services independently or under the circumstances mentioned.

Q. What about directors who come to the U.K. to make a film?

A. A film director does not come within the definition of entertainer for U.K. withholding tax purposes. So there will be no U.K. tax liability unless that person is in the U.K. for a long enough period in one tax year to be considered resident.
If however, an individual fulfils a dual role e.g. of actor and director, the income which refers to the input as an actor will still be subject to tax in the U.K.

Q. What if the filming covers work in more than one country?

A. Only work in the U.K. will be subject to U.K. tax. Any apportionment of an actor's guaranteed fee for the whole film is normally made on the basis of the actual filming schedule. For example, if the guaranteed fee is U.S. $ 1,000,000 covering 8 weeks of principal photography, 6 of which are in the U.K., the gross income subject to U.K. tax would be U.S. $750,000.

Q. What if filming overruns and I receive more than the guaranteed fee?

A. Any overage payments would also be subject to U.K. tax to the extent that the additional filming days are in the U.K.

Q. What about activity undertaken during pre- and post-production?

A. This Unit has always worked from the view that a film or TV actor is essentially paid for and over the period of principal photography. In general therefore, we would be very reluctant to agree any apportionment of income over any period longer than the period of principal photography - unless there is compelling evidence of particular circumstances to the contrary.

Q. What if I subsequently receive more income if the film is a commercial success?

A. It is not unusual for some acting contracts to include a clause or clauses which might give rise to the possibility of deferred, contingent or residual payments at some point in the future. If and when any such income arises, it will be subject to U.K. tax to the same extent that the original guaranteed fee was. In practice, it is possible that withholding tax may not be deducted at source from such payments - if the payments are made by a non-U.K. distribution company for example. There is however still an obligation on the actor concerned to make a return of such income to the Foreign Entertainers Unit (see Self Assessment and Foreign Entertainers.

Q. I understand that withholding tax is a fixed rate of gross income but that my final U.K. tax liability will be at normal U.K. tax rates on net income. Can I agree the final liability at the time of filming?

A. Yes. This is covered in the Reduced Tax Payment Application pages. It is worth pointing out that all expenses paid by the film production company to or on behalf of the actor concerned will need to be taken into account when agreeing an application. Therefore only those allowable expenses over and above the amounts paid or met by the film production company will be deductible from the gross income.

In addition, there are certain circumstances in which particular expenses met by the film production company may give rise to additional tax liability. For example, if an actor is accompanied to the U.K. by family members or non-business companions, any travel, accommodation and subsistence expenses met by the production company for those individuals would be treated as additional income of the actor.

Q. Does that mean that all expenses met by the production company will be subject to withholding tax if I do not make a Reduced Tax Payment Application?

A. Not necessarily. Even if no application is made, it is normally possible to agree that reasonable travel, accommodation and subsistence expenses paid by the production company for the actor may be excluded from U.K. withholding tax by concession, on the basis that they are likely to be ultimately allowable for U.K. tax purposes (subject to sight of the contract covering the actor's services to confirm the relevant terms).

Popular Music

"Popular Music" covers a very wide and undefined area, but these notes are mainly aimed at rock and mainstream "pop" performances by non-residents in the UK.

What is included?

  • Performances
  • Rehearsals
  • Entitlement from the sale of merchandising at venues
  • Sponsorship
  • Non-recoverable record company support
  • Filming or recording of the performances
  • Miscellaneous income from television and radio for example, timed to coincide with touring
  • Promotion payments, for example from record companies (subject to exemptions for expenses paid on the basis that these are likely to be ultimately allowable for UK tax purposes
  • Flat rate fees for recording

What is not included?

  • Recording where the payments are calculated by reference to the number of units sold
  • Sales of merchandising at normal retail outlets unconnected with the performing activity
  • Payments to non-performers such as crew members, technicians etc
  • Recoverable record company support

Reduced rate applications

On most occasions these are made because of the high level of costs associated with touring activity. (See Reduced Tax Payment Applications for what is required). UK payers will be required to deduct tax at basic rate in the absence of an agreed reduced rate application and if you think you have paid excess UK tax and cannot claim credit for it in your home state, claims for repayment can be filed after 5 April following the activity. Alternatively, FEU may insist on filing if we consider further tax due may be at risk.

Expenses

Advice is available on Reduced Tax payment Applications on the kind of expenses generally allowable in arriving at the net income from the UK activity which is subject to UK taxation. In the music world it is not unusual for touring activity to be timed to coincide with record releases. Because of this we may seek to match or apportion expenses to particular streams of income and consequently to disallow some expenditure which may not be "wholly and exclusively" for the purposes of the touring activity.

Sport

Withholding Tax

As a general rule sports persons are unable to make Reduced Tax Payment Applications since their income, and to some extent their expenses, depends upon success. Basic rate Withholding Tax is therefore deducted by the tournament organisers from prize winnings after a modest administrative per diem allowance.

Withholding Tax is then treated as a payment on account against the ultimate UK Income Tax liability which, dependant on the level of income and expenditure, is subject to progressive levels of UK taxation.

Filing Requirements

The final UK Income Tax liability cannot be determined until after 5 April each year, when an income and expenditure account for the UK activities should be considered.

Ordinarily unless we issue a Return for completion, in the expectation of securing tax over and above the withholding tax secured at source or to enable it to repay tax claimed by an individual, there will be no requirement to file a Return.

The tax deduction certificate(s) FEU2 should be submitted to the sports person's home Revenue authority in support of any claim to tax credit. If we have taken the view that the withholding tax secured on account will equate to the final liability and do not issue a return as a consequence then the tax credit claim will require no amendment unless a return is requested by you.

UK Income

In addition to the tournament prize winnings, appearance fees and other sports related income, the income side should be supplemented by the UK proportion of any endorsement income received in respect of clothes, shoes, equipment or patches. In FEU's experience any endorsement contract would include the requirement to use or wear the product, whenever and wherever engaged on sporting activities within a defined territory. A proportion of any annual retainer which includes the UK as a territory could, therefore, be treated as relating to the UK.

Any bonus payment for particular UK success should also be brought into account as should the proportion of any ranking bonus.

Based on the contractual details and comparison of UK versus World-wide activities it should be possible to arrive at some mutually acceptable proportion for the UK element of endorsement income, based for example on days in the UK or tournaments over tournaments.

Expenses

On the expenditure side, the usual tax deductible amounts should be considered, for example; the costs of travel to and from the UK tournaments, accommodation expenses within the UK, caddy and coaching fees appropriate to the UK tournaments, professional levies, management and agent commissions.

Performing Companies visiting the UK

When a Performing Company visits the UK it’s performing employees, as entertainers, will fall under the FEU regime.

A Performing Company could be an orchestra, dance troupe, ballet company, theatre group, circus etc.

Unless the Performing Company’s representatives make a Reduced Tax Payment Application (Non-Resident Employees), on behalf of it’s members, withholding tax must be withheld from all payments at the basic rate of 22%.

Further information

For further information please refer to the FAQ page or contact us (Foreign Entertainers Unit).

 

   

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