NI status change for entertainers?
27 June 2013
HM Revenue & Customs (HMRC) has today launched a public consultation on the national insurance status of ‘entertainers’. In national insurance legislation ‘entertainers’ are defined as persons employed as actors, singers, musicians or in any similar performing capacity. HMRC is consulting on what class of national insurance contributions (NICs) entertainers should pay and it is recommending that entertainers should no longer be categorised as ‘employed earners’ with a liability to pay Class 1 NICs.
Currently, the Social Security (Categorisation of Earners) Amendment Regulations 2003 categorise entertainers as employed earners for national insurance purposes. HMRC is recommending the repeal of these Regulations and in doing so HMRC is saying that entertainers would become liable to pay Class 2 and Class 4 self-employed national insurance contributions.
This is a fundamental challenge to long established Equity policy. For many years Equity has sought to protect the rights of members to pay Class 1 NICs as employed earners. The consultation that has been announced today and HMRC’s recommendation contained within are extremely concerning developments for Equity.
To date the payment of Class 1 NICs has protected the rights of many Equity members to claim contribution-based benefits, such as Contribution-based JSA, and it has also helped to ensure that members have been able to claim means-tested benefits, such as Income-based Jobseekers Allowance and Housing Benefit, as employed earners. Claiming means-tested benefits as employed earners maximises the amount of benefit members qualify for when they were without work.
Equity is extremely concerned that if as a result of this consultation HMRC says to employers that they are no longer required to deduct and pay Class 1 national insurance in respect of the salaries paid to entertainers, Equity’s members’ Universal Credit entitlement will be significantly reduced. Remember that Universal Credit will soon replace not only Income-based Jobseekers Allowance and Income-based Employment and Support Allowance, but also Housing Benefit and a number of other benefits.
HMRC says that Equity members will not lose out under Universal Credit if they are categorised as self-employed rather than employed. We are not at all convinced by this assurance. If Equity members are assessed for Universal Credit purposes as gainfully self-employed they will be assessed as having a Minimum Income Floor when their Universal Credit entitlement is assessed. This is an amount of money they will be assumed to have from their gainful self-employment, even if they don’t earn anywhere near it, and it could be as much as £938.82 per month or £11,265.80 per annum. The application of the Minimum Income Floor to the Universal Credit claims made by Equity members will substantially reduce what Equity members qualify for under the reformed welfare benefit system.
Equity has begun work on a detailed and technical response to HMRC’s national insurance status consultation. We will be arguing that the majority of those working on Equity contracts or contracts with similar terms and conditions are employed earners, not self-employed, for national insurance purposes. We are also working to ensure that members are able to access Universal Credit at rates which are reflective of their need for financial help from the state when they are not working.
To inform our work on Universal Credit and our response to HMRC’s consultation on the national insurance status of entertainers we need the help of Equity members. We need you to complete a short survey which will provide valuable information and evidence which we will be able to use in our representations to HMRC, the Department for Work and Pensions and the Department for Culture, Media and Sport. If you are a member of Equity, please complete the survey by following this link, if you are not currently logged into the site, you will be asked to enter your details.
It is also critically important that as individual members of Equity who will be affected by the outcome of HMRC’s national insurance status consultation, you also make your own views known by responding to the consultation so that your opinion counts. We are calling on Equity members to respond to HMRC’s consultation directly by filling in your name and address on the letter you will find by clicking this link and sending it to George Osborne, Chancellor of the Exchequer and to your local Member of Parliament. The letter carries a simple message about the importance of Class 1 national insurance contributions for the majority of members working on Equity contracts or contracts with similar terms and conditions.
Equity staff will be touring the UK over the next few months to give talks to groups of Equity members about what Universal Credit will mean to Equity’s membership.
- Equity's membership Tax Adviser Max Beckman answers your freqently asked questions about the changes being considered.
- Find out more about Universal Credit here.
- For a link to HMRC’s national insurance status consultation document click here https://www.gov.uk/government/consultations/national-insurance-and-self-employed-entertainers.
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