Update March 2020: As a result of the COVID-19 (coronavirus) pandemic, the Government has announced that it is postponing IR35 changes for a year, to April 2021.
HMRC has published new rules governing the taxation of freelancers in the film and TV industry following an extensive and lengthy review.
Directors UK was part of the consultation group and following our lobbying, HMRC’s new rules have confirmed that directors are self-employed for tax purposes and scrapped the much-hated nine-month rule.
Self-employed tax status has been an issue because last year the Government introduced new “IR35” rules which mean that employers must decide whether a freelancer providing their services via a personal services or “loan-out” company would – if they were not doing so – be judged to be PAYE for tax purposes. HMRC has been pursuing court cases against some freelancers – mostly presenters – under these new rules. The new rules confirm that directors are one of a large number of freelance roles in film and TV which are considered to be self-employed for tax purposes.
The nine-month rule meant that an employer had to put a freelancer on to PAYE for any engagement that lasted longer than nine months. In practice most employers avoided having to do this and instead ensured that they never employed a freelance director for more than nine months in any year. For many directors, especially those working in continuing drama, this amounted to an enforced period of three months unemployment each year.
Under the new rules, when a programme is re-commissioned an employer is simply required to review the employment status of the individual and “consider whether, if the engager re-hires the same person for further engagements, each of those engagements continues to be a separate agreement, or if the parties have created an overarching agreement for a longer term commitment to each other”. Since almost all freelancer director engagements are on a one-off basis, such a “commitment” is unlikely to exist for freelance directors unless you have specifically entered into a long-term contract with an employer.
The new rules also include for the first time a more comprehensive listing of the different types of director role, with definitions for each that have been provided by Directors UK. We have designed these definitions to be consistent with our own credit hierarchy and we urge members to adopt the correct credit for your role.
Directors UK CEO Andrew Chowns commented: “We have been campaigning for three years to get rid of the 9-month rule and replace it with something that is fair for freelancers as well as employers, and I am delighted that HMRC has now agreed to amend the tax rules. This will make a big difference to many directors especially those working on drama serials.”
The new rules now form part of HMRC’s tax manuals and can be found here
- Particular occupations: entertainment industry: TV and radio workers: behind camera workers roles treated as self-employed
- Particular Occupations: entertainment industry – TV and radio workers - behind the camera workers roles normally treated as self-employed, Appendix 1
- Particular occupations: entertainment industry: TV and radio workers: behind camera workers short term engagements
- Particular occupations: entertainment industry: TV and radio workers: behind camera workers definition of terms used in Appendix 1