Working for a short period in the UK does not give business visitors a tax headache. But singers, dancers, footballers, athletes and other ‘foreign entertainers’ pay UK income tax even when only briefly in the country.
‘Foreign entertainers’ and sportspeople (including Brits based abroad) pay UK income tax on their UK earnings (read more about Foreign entertainer tax rules on the gov.uk website).
Agencies and venues commissioning talent have to deduct tax at 20% on payments made for entertainers services, even if the payment is going to another company rather than direct to the performer. Where no deduction is made, the payment is ‘grossed up’ so tax is 25% of the original payment amount.
Below are three example situations where we have considered and explained whether the tax would be applicable.
Example one: The supermarket and the footballer
A retired premier league footballer, based in Spain, wishes to be paid via his ‘personal service company’ for work on a set of adverts due to go out on UK television, and appearances opening new supermarkets.
No UK tax is due on payments made for TV adverts shot on location in Spain. Payments for appearances to open stores in the UK may be taxable however, as even a retired footballer could be considered an entertainer for the tax rules. The supermarket needs the contractual right to make deductions for tax from payments to the ‘personal service company’.
Example two: The cosmetic company and the movie star
An Oscar-winning US actress lands a deal to promote skincream. She is flown first class to the UK, put up in a five star hotel and paid a chunky fee for a set of adverts.
Not just the fee but also the expenses have to have tax deducted when paid. For a flight costing £1,000, £250 extra will have to be paid over to HMRC (£250 is 20% of the total £1,250).
Example three: The sprinter
An Olympic sprinter returns to the UK to compete in a race. Alongside the race entry fee (and possible prize money) he also receives performance fees for promotional work from sponsors.
The London Anniversary Games, like the Olympics, have special exemption from the tax rules for foreign entertainers. But for any other paid competition, tax is likely to be due, collected on any payment made for the appearance or promotional work, even if it doesn’t go straight to the sprinter.
For more information on what to consider when hiring a ‘foreign entertainer’ or sports person, please read our article ‘Hiring a foreign entertainer – your tax to do list’.
Author: Samuel DooleyThis information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.