Changes to National Insurance for Actors

National Insurance for actors is due to change on 6th April 2014.

Currently, entertainers are treated as being employed for National Insurance purposes and self-employed for tax purposes. Therefore Class 1 National Insurance is automatically deducted from their pay.

From 6th April 2014, this will stop and entertainers will now be treated as self-employed for both tax and National Insurance. This means that entertainers will now have to pay Class 2 and Class 4 National Insurance as opposed to Class 1.

This link explains more about what National Insurance Contributions pay for. Class 4 contributions do not count towards any state benefits. They are often seen as another tax.

Currently National Insurance legislation defines ‘entertainers’ as persons who are employed as actors, singers, musicians or in any similar performing capacity.

As a result of the changes, there are a number of both positive and negative implications.

We have highlighted a few for you below.

Positive

• You will receive more money when you get paid each week/month.

• Student loan repayments will not be deducted at source, so again, more money in your pocket.

• No confusion with what National Insurance you should be paying.

• You will not be paying more National Insurance than required.

• Employers will save money as they will no longer incur Employers National Insurance payments, saving 13.8%.

Negative

• Unless your earnings (profit) are to be under £5,885 for the 2014/2015 tax year, you will have to pay Class 2 National Insurance of £2.75 per week.

• When your tax return is produced you will have Class 4 National Insurance to pay. For the 2014/2015 tax year, this is 9% of your self-employed profits over and above £7,956.

• If applicable, your student loan repayments will be calculated at the same time as your tax return, again making the tax to be paid appear higher than previous years.

• You may lose your entitlement to claim some contributory-benefits e.g. Contribution based jobseekers allowance, statutory sick pay, statutory maternity, paternity and adoption pay.

For us, the biggest winner from the changes will be the Production Companies who will not be required to pay the 13.8% Employers National Insurance. Hopefully this will encourage more

Production Companies to be set up and for more people to be employed resulting in more jobs for everyone!

So, what do you need to do?

Importantly, as you will be receiving more money than usual when you are paid after 6th April 2014, it is important to ensure that you save enough money to pay your tax when the time comes.

Then;

1. If you are not currently registered for Class 2 National Insurance contributions, you will need to register by downloading the following form www.hmrc.gov.uk/forms/cwf1.pdf

2. If you want to pay your National Insurance by Direct Debit, you will also need to download this form www.hmrc.gov.uk/pdfs/ca5601.pdf

3. If you expect your earnings (profit) to be under the Small Earnings Exception threshold of £5,885 for the 2014/2015 tax year, you can download and complete form 1 but also apply for exception from Class 2 National Insurance.

However, if you do not pay Class 2 National Insurance, you will not have a qualifying year for State Pension and may also be losing entitlement to other benefits such as contribution-based Employment and Support Allowance.

HMRC have not yet released the relevant exception form for 2014/2015 but contact us if you want to apply and we will email you when it’s available.

You can also register by phone by contacting HMRC’s Self-Employed Helpline on 0300 200 3505 – if you do this please explain that you are an entertainer and that you wish to register to pay Class 2 National Insurance Contributions from 6th April 2014.

Please contact us if you have any questions or require any further assistance. We are happy to help as much as we can.

Call: 01905 823177 or email: info@theataccounts.co.uk

You can read about the full details here www.hmrc.gov.uk/briefs/national-insurance/brief3513.htm

Download this article at: www.theataccounts.co.uk/news

You can read more about Class 2 National Insurance here www.hmrc.gov.uk/working/intro/class2.htm

You can read more about Class 4 National Insurance here www.hmrc.gov.uk/working/intro/class4.htm