Government to change the National Insurance status of entertainers
31 October 2013
The Government has decided to change the National Insurance status of ‘entertainers’ and this will take effect from 6 April 2014.
Currently National Insurance legislation defines ‘entertainers’ as persons who are employed as actors, singers, musicians or in any similar performing capacity and Regulations categorise ‘entertainers’ as ‘employed earners’ liable to pay Class 1 National Insurance contributions.
After a recent HM Revenue and Customs public consultation on the National Insurance status of ‘entertainers’, which drew a record 11,814 individual responses, the Government has decided that the policy rationale for categorising ‘entertainers’ as employed earners for national insurance no longer holds up. HMRC had recommended that the Regulations that bring ‘entertainers’ into a Class 1 National Insurance liability should be repealed from 6 April 2014 and this is what the Government has decided to do.
This means that from 6 April 2014 most Equity members will no longer pay Class 1 National Insurance contributions and will instead be categorised as self-employed for NI purposes. This change will provide a windfall for employers, whilst the implications for Equity members are far reaching and not at all straightforward.
The implications of this change include:
- A windfall to employers of 13.8% from 6 April 2014 – that is the current rate of secondary Class 1 National Insurance contributions paid by employers;
- Lower amounts of National Insurance being paid by Equity members;
- A restatement by HMRC of members’ self-employed tax status;
- A loss of members’ entitlement to claim some contributory-benefits, including Contribution-based Jobseekers’ Allowance, Statutory Sick Pay, Statutory Maternity, Paternity and Adoption Pay;
- The categorisation of entertainers for Universal Credit purposes as self-employed;
- The calculation and repayment of student loans on a self-employed basis rather than through the payroll.
Equity General Secretary Christine Payne: “Over the years Equity has argued for performers and stage managers to have a dual status for tax and National Insurance so that they can claim allowable expenses against tax and pay into the National Insurance pot in order to draw down benefits, but increasingly their rights to benefits have been eroded and will be further restricted under Universal Credit.
"We will be monitoring the ending of dual status carefully. HMRC has assured Equity that it has never been its intention to reduce our members’ access to benefits and we will be putting that to the test.
"For regularly working performers and stage managers the change will mean that they no longer have the extra financial burden of paying Class 1 NI. Entertainment employers will also benefit from not paying Class 1 NI for performers and stage managers and we will be giving them our views about how they might use this windfall from the Government – more jobs and better pay will be at the top of our agenda.”
In addition to the guidance issued on members registering for self-employed National Insurance the following is also the case.
As of 6 April 2014 entertainers will no longer be regarded by HMRC as employed earners for National Insurance purposes as the regulations are being repealed. This will mean entertainers will be regarded as self employed for tax, NI and social security purposes. It is Equity’s view from 6 April 2014 for employment law purposes entertainers will remain workers and will also remain eligible jobholders for pension auto-enrolment purposes. In relation to two additional issues that have arisen on payslips and invoicing for pay, Equity advises that payslips need to continue to be produced and entertainers in our main industrial areas in theatre, film and TV do not need to invoice for pay. PACT, SOLT and UK Theatre agree with this position which has been specifically raised with HMRC by Equity. HMRC have not contradicted this view, other than to clarify that student loan repayments will now be organised on a self employed basis, so there will be no need to account for student loan repayments via the payslip.
The National Insurance changes mean you may lose some rights - see the FAQ document for details. Equity is determined to negotiate to replace any lost rights with contractual entitlements.
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