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.
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 email.
Q. Are only non-UK resident actors affected?
A. No. Anyone who does any work in the UK 'in front of the camera' (including as a voice-over artist, stand-in, stunt person, puppeteer etc) will have a UK 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 UK to make a film?
A. A film director does not come within the definition of entertainer for UK withholding tax purposes. So there will be no UK tax liability unless that person is in the UK for a long enough period in one tax year to be considered resident.
If however, an individual fulfils a dual role eg of actor and director, the income which refers to the input as an actor will still be subject to tax in the UK.
Q. What if the filming covers work in more than one country?
A. Only work in the UK will be subject to UK 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 US $ 1,000,000 covering eight weeks of principal photography, six of which are in the UK, the gross income subject to UK 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 UK tax to the extent that the additional filming days are in the UK.
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 UK 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-UK 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 UK tax liability will be at normal UK 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 UK 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 UK withholding tax by concession, on the basis that they are likely to be ultimately allowable for UK tax purposes (subject to sight of the contract covering the actor's services to confirm the relevant terms).
'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.
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.
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.
As a general rule a sportsperson cannot make reduced rate withholding tax applications. This is because your earnings from an event will depend on how successful you are in that event and this will not be known in advance of the competition.
Tournament organisers will withhold (deduct) basic rate income tax from all prize winnings.
The withholding tax deducted can be used as a credit against your final UK tax liability.
It will depend on your circumstances. A sportsperson's final UK tax liability cannot be determined until after 5 April each year (ie the end of the UK tax year).
You will need to complete a UK tax return if:
In most cases, yes. The claim should be made to the tax authorities of the country where you are registered to pay tax, usually your country of residence. You will receive a tax deduction certificate, FEU2, from the person or organisation making the payment to you showing details of any withholding tax deducted. You will need to send these with your claim.
Some countries do not have double taxation agreements with the UK. If you are resident in a country without a double taxation agreement with the UK, you will usually not be able to claim credit for UK tax paid.
When a non-UK resident sportsperson performs in the UK, they must pay UK tax on both their prize money or appearance fee and the proportion of their worldwide endorsement income that is connected to their UK performance. Both the direct earnings and the endorsement income should be included in the tax return. The phrase ‘endorsement income' also includes sponsorship income.
The proportion of your worldwide endorsement income that is chargeable to UK tax will depend on the precise wording of the contract.
Any payments for competing in or success in UK specific events are wholly taxable in the UK but the proportion of any 'worldwide' amount must be calculated on a 'just and reasonable' basis.
Usually an endorsement contract will contain a mixture of:
Payments relating to a sportsperson's worldwide activities (such as B and C above) must be apportioned to determine the amount that is connected to a UK performance. The apportioned amount must be 'just and reasonable': what is 'just and reasonable' will always be a question of fact to be determined by reference to the contract. However, for simplicity, there are two calculations that we will usually accept give a result that is reasonable:
The amount of Income calculated using one of these formulas will need to be accepted by HMRC as being 'just and reasonable', and supported by evidence. Were evidence is not provided calculations may not be accepted.
If the suggested RPD or RPTD calculations give a result which you do not think is reasonable you may submit an alternative calculation. You should provide your reasons for using the method you choose and provide evidence to support the figures.
A relevant performance day is any day on which you:
Any activity undertaken in private will not be counted as a performance day but it may be a training day.
A relevant training day is any day on which you spend three or more hours in physical sporting or training activity which contributes towards performance of the sport for which you are endorsed. This may be:
A session of physical training lasting less than one hour does not normally count towards the three hour requirement.
Training that does not include physical activity does not contribute to a relevant training day.
Any activity undertaken in public will not be counted as a training day but it may be a performance day.
In simple terms you should not include any days on which you do not either take part in a competition or public endorsement activity or undertake three hours or more of physical training activity.
Examples of non-qualifying days include:
For the avoidance of doubt, a day where two hours of physical training activity is done, along with two hours undertaking some other non-physical activity, would not count as a training day under the RPTD method. Although there are four hours of activity, there are only two hours of physical training activity.
No. A day on which you compete and train can only be counted once and will always be regarded as a performance day.
What records you keep of your training or performance days is for you to decide. However some examples of what HMRC might expect to see are:
HMRC do not expect you to maintain all of these records but you will need to keep a contemporaneous record of your training days if you want to use the RPTD formula.
If you do not already keep appropriate records you may wish to start doing so now if you want to use the RPTD formula.
HMRC will allow apportionment calculations to include training days for the 2010-11 tax year onwards.
Further information about generic record keeping can be found by following the link below
Yes. For UK tax purposes your performance days in the UK are treated as a trade and you may claim a deduction for any expenses incurred wholly and exclusively for the purposes of that trade.
For example you may claim for accommodation in the UK; travel, support staff or the use of training facilities.
We will not usually accept claims for medical treatment or entertaining expenses.
The amount of tax you pay will depend on how much income you earn and what expenses you claim. The UK's approach to taxing sports professionals is in line with the OECD Model Tax Treaty and we will only tax income which relates to a UK performance.
Any tax due is charged at normal UK rates and any allowances and other deductions due are deducted before these rates apply. You will usually also be liable to tax under the normal rules of your home country. However, in most cases, you can claim relief in your country or State of residence for UK tax paid.
1. Trevor is swimmer. He lives outside the UK. He has one endorsement contract with a sports company and another with a breakfast cereal manufacturer. Both contracts reward him for competing in swimming competitions and attending company promotional events.
In the 2010-11 tax year Trevor competes in six swimming competitions around the world including the European championship which is held in the UK. Each competition lasts for three days and he competes every day.
Therefore, in the year Trevor has a total of 18 performance days, three of which are in the UK.
Before every competition Trevor spends two weeks training in the country where the competition is held. His training routine is to swim for an hour, take a break then train in the gym for an hour take another break and then train for another hour in the gym. In addition on 150 days of the year he trains in a gym or in the pool for at least three hours a day.
Therefore, in the year Trevor trains on 234 days, 14 of which are in the UK.
Trevor attends one promotional event for the sports company and two for the cereal manufacturer. All three events are outside the UK. These days counts as (promotional) performance days
Therefore in the year Trevor has a total of three (promotional) performance days none of which are in the UK.
On every other day of the year Trevor swims for 45 minutes takes a rest, then spends one hour training in the gym.
As Trevor spends less than three hours a day on these activities the days do not count as training days.
For 2010/2011 Trevor calculates his RPTD as follows:
For the sports company
UK performance days (3) + UK training days (14) + UK promotional days
(0) = 17 days, over
Total performance days (18) + total training days 234 + total promotional days (1) = 253 days.
For the breakfast cereal company
UK performance days (3) + UK training days (14) + UK promotional days
(0) = 17 days, over
Total performance days (18) + total training days 234 + total promotional days (2) = 254 days.
2. Alice is a table tennis player. She lives outside the UK. She
has one endorsement contract with a sports company which rewards her
for competing in table tennis tournaments.
In 2010/2011 she is injured for three months and does not train, practice or compete. In the remaining nine months she plays in competitions on 40 days. One of the competitions was the UK championship which lasted for four days. Alice played every day.
Therefore in the year Alice has a total of 40 performance days, four of which are in the UK
In addition, during the nine months when Alice was fit she trained on
175 days, playing table tennis for at least three hours each day. 90
of these days were in the UK.
Therefore in the year Alice has a total of 175 training days, 90 of which were in the UK
For 2010/2011 Alice calculates her RPTD as follows:
UK Performance days (4) + UK training days (90) = 94 days, over
Total performance days (40) + total training days (175) = 215 days:
3. Erich is an athlete. He lives outside the UK. He has
a sponsorship agreement with a minimum competition requirement.
In the year 2010/2011 Erich does not compete in the UK.
Therefore, Erich is not chargeable to UK tax.