SE62810 - Tax treatment of the entertainment industry: theatrical performers: fees paid to agents - amount of the deduction

Where a deduction is permitted by Section 201A ICTA 1988 it applies to fees paid either

• under a contract with a person who carries on a trade or profession as an employment agency, or
• to a Co-operative Society that acts as agent for its members.

To be deductible the fees must be

• paid out of the emoluments of the employment falling to be charged to tax for the year concerned and
• calculated as a percentage of those emoluments or part of them.

The amount of the fees that can be deducted, including any VAT payable on them is limited to 17.5% of those emoluments.

Agents fees are usually between 10% and 15% of a performer’s income so the limit of 17.5% will normally cover an agent’s fee together with any VAT paid on it.

Where a performer requests a deduction and it does not breach the 17.5% limit it should usually be accepted. If, exceptionally, you wish to check whether a deduction is due you should ask the performer to produce documentary evidence.