Partner Article

Sense and NICability…

Actors, musicians and other entertainers received some good news this week - the government is to repeal some National Insurance rules that will save them money and, it is hoped, attract more producers to use UK-based talent.

Most entertainers have been in the odd situation of being accepted as self-employed for tax purposes but nevertheless treated as employed for NI since some regulations were introduced in 2003. The background to why these rules were ever thought necessary is convoluted, and could form a useful case study to educate future policymakers about avoiding unnecessary reaction to events and unintended consequences, but that’s all soon to be history and now is a time to look forward.

HMRC consulted on the best choice of policy in this area earlier this year and has settled on the policy it originally preferred, which was clearly the most sensible: take entertainers and their ‘employers’ out of Class 1 NI contributions and let them pay NICs as self-employed workers.

The choice has been supported overwhelmingly by the industry – over 7,000 musicians alone wrote in support of the change, and only 100 respondents out of nearly 12,000 objected, so HMRC will be making a lot of people happy next April when the regulations are repealed.

The main objections to the change relate to loss of benefit entitlements - self-employed actors who are out of work can’t claim jobseekers’ allowance based on their contributions, and may be treated under the new universal credit rules to have income that is fictitious. The old rules were intended to ensure that actors, etc could claim JSA when they were ‘resting’, but the evidence suggested that this was not happening in practice.

The main attraction of the change for entertainers and the producers who engage them is simplicity. The Class 1 rule is immensely difficult to operate, for contributors and HMRC, so paying Class 2 and Class 4 will be good news. The other benefit for producers is that the 13.8% employer NIC surcharge on their labour costs will disappear, making the UK more competitive as a production location.

Less work all round, and a drop in labour costs that should mean more entertainers can find work. And HMRC applying common sense to NIC rules to achieve simplification. What’s not to like?

This was posted in Bdaily's Members' News section by Baker Tilly .