Foreign entertainers and sportspeople appearing in the UK are liable to pay UK tax on earnings linked to those appearances. If they receive payment which is more than the UK personal tax allowance, the person or company who makes the payment will deduct tax in advance and pay it to HMRC.
This is called withholding tax and is usually deducted at the UK basic rate of Income Tax.
This advance payment is known as payment on account. It can be used as payment towards their final tax bill in the UK and, in most cases, their home country when the FEU2 tax deduction certificate from the person making the payment is presented. This will show the tax deducted from the payment.
The guidance targets specific groups of people that are likely to be visiting the UK but are not resident here, including:
- Film actors
- Performing companies and groups
- Musicians and bands
- Sportspeople
The last is particularly complex as sportspeople will often receive payment not just for the day or days of their event but also for publicity activity and training days in the UK. The HMRC section of .Gov provides specific examples to help sportspeople understand their position regarding UK tax.
The main updates within the guidance relate to the film actors section to explain that UK tax will be calculated by using the number of UK filming days divided by the number of worldwide filming days, with any future payments (deferred, contingent or residual) being calculated in the same way.
The expenses section has also been updated to show that HMRC may disallow an entertainers expenses made relating to touring activity that’s timed with an album release if they aren’t directly related to the touring activity.
