IR35:TaxRulesforFreelancers

In January 2020 HMRC published rules governing the taxation of freelancers in the film and TV industry.

These new rules confirm that directors are self-employed for tax purposes, and they also scrap the rule which meant that employers had to put freelancers on to PAYE for any engagement lasting longer than nine months.

Self-employed tax status has been an issue ever since the Government introduced IR35 tax rules in 2017, which stated 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 those rules. The latest rules now 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 had led to a practice where most employers would avoid employing a freelance director for more than nine months in any year, in order to avoid having to put them on to PAYE. For many directors, especially those working in continuing drama, this amounted to an enforced period of three months unemployment each year.

But now, under the most recent 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.

Also included within the new rules is 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 Guide [ADD CREDIT GUIDE ONCE BUILD] and we urge members to adopt the correct credit for the role you performed.

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