This controversial issue revolves around the fact that whilst self-employed for income tax purposes, an entertainer is generally deemed to be an employed earner for NIC purposes.
Up for consultation is a choice of action to take effect from 6 April 2014, with the choices being:
- Do nothing – entertainers retain dual status for tax and NICs.
- Simplifying legislation within the Class 1 NICs regime.
- Moving entertainers’ earnings into the Class 2 and 4 NICs regime like all other self-employed people
Not surprisingly, HMRC do not consider it is realistic to do nothing. It is a very important issue for entertainers as if the decision is to bring them all into the self-employed net for NICs they will no longer have earnings which count towards entitlement to earning-related contributory benefit – something that is vital to the majority of entertainers given that HMRC believe the average annual earnings are only £12,000 and they perform for an industry average of only about 13 weeks per year.