Tax

Planet Art eXchange | PAX ArtWork | The Visiting Artist Info & Reseources | Tax

The law

As a rule, the UK charges tax on income originating in the UK, and tax liability is based upon a person’s status either as a ‘resident’ or a ‘short term visitor’.

The amount of tax charged depends on whether a person is a resident and/or ordinarily resident in the UK, and occasionally on their place of permanent residence (‘domicile’).

The HM Revenue & Customs website at http://www.hmrc.gov.uk/ has comprehensive information in Form IR20 Residents and Non-residents: Liability to tax in the United Kingdom. This can be downloaded from www.inlandrevenue.gov.uk/pdfs/ir20.htm or obtained from your local tax office.

Arriving from abroad

If overseas artists come to the UK and begin working for an employer, or if they are self-employed, they will generally be required to pay UK National Insurance contributions – some exceptions to this include:

Visitors from EEA countries.
Visitors from ‘Agreement’ countries - (See IR20 for further details).
Tax notes that apply to visiting performing artists

When an artist gives a type of ‘masterclass’ or seminar in the UK for the paying public this activity could be considered to be of an ‘entertainment nature’, and the Inland Revenue would require any payer to deduct withholding tax when paying the artist.
In the case of visual performance artists the Inland Revenue recognises that the definition between visual representational art and performance art can be difficult to define. The Inland Revenue regards any performance given in the UK by a non-UK resident performance artist, to be essentially of an entertainment nature, and so they would look to withhold tax from the employer who was paying the artist.

Resident

Specific regulations govern resident status. People are regarded as residents in a tax year if:

They are in the UK for 183 days or more in a tax year
They visit the UK regularly and after four tax years their visits during those years average 91 days or more a tax year (see the exact conditions in Form IR20)

Exemptions & Reductions

If the total payments to an individual or group, including any connected payments by an associate, will be less than £1000 during the tax year (6th April – 5th April the following year) then tax does not need to be withheld. Total payments include not only cash but also expenses paid on the performer’s behalf (such as air fares).

If an artist or group expects to make £1000 or less they, or their UK promoter, should apply to the Foreign Entertainers Unit to arrange a reduced rate of taxation. In all cases, the Foreign Entertainers Unit will supply form FEU 4 to authorise the reduced tax rate. If you have not received this form when you come to make the payment you must deduct tax at the basic rate from the gross payment you make.

The Guide to Paying Foreign Entertainers (Booklet FEU 50) explains the Foreign Entertainers tax scheme. The help sheet IR303, Non-Resident Entertainers & Sports Persons which is aimed at the overseas entertainers themselves may also be useful. Both can be downloaded from
www.hmrc.gov.uk/nonresidents/iwtforeign_entertainers.shtml or requested from the Foreign Entertainers Unit at the address overleaf.

Non-UK Residents are eligible for tax relief if they are:

A Commonwealth citizen;
A citizen of a state within the EEA (see list of countries in IR20);
A resident of The Channel Islands or The Isle of Man;
A former UK resident who lives abroad for health reasons;
A national and/or resident of a country with which the UK has a double taxation agreement that allows such a claim (see IR20);
Any other conditions as outlined in IR20.
Tax allowances are also made for:

People who leave or arrive in the UK part way through the tax year;
People who are resident of a country with which the UK has a double taxation agreement (see full conditions in IR20, including a list of Britain’s double taxation agreements with other countries – N.B there are special notes relevant for the Russian Federation and Yugoslavia);
Under many double taxation agreements visitors may be able to claim exemption from UK tax on earnings from an employment; and profits or earnings for independent, personal or professional services.

Short Term Visitor

A ‘Short term visitor’ is recognised as a person who visits the UK for only limited periods in one or more tax years, without any intention to remain for an extended period of time.

Arrangements to limit the amount of tax withheld

Normally the basic rate of tax is deducted from the gross income. However, it is possible to write to the Foreign Entertainers Unit to request an arrangement whereby the payer may deduct an amount which is less than the basic rate. This is done so that an amount which corresponds as closely as possible to the entertainer's final liability on the payment is deducted. A reduction can be requested on the basis that expenses will substantially diminish net income. Applications must be made to the Foreign Entertainers Unit no later than 30 days before the payment is due to be made and must include the following information:

dates of arrival in and departure from the UK
whether the entertainer is likely to return to the UK again before the next 5 April
a projection of income with details of dates and venues
an itemised projection of the expenses which will be incurred
a copy of any contracts covering appearances.

Withholding Tax (Also known as Foreign Entertainers Tax)

Any payment made to a person which arises directly or indirectly from the appearance of an overseas artist in the UK is subject to a withholding tax which the UK payer is obliged to deduct at the basic rate from all payments made directly or indirectly.

Taxable payments include:

Appearance fees
Exhibition income
Box Office percentage
Broadcasting / Media fees
Film fees
TV rights
Tour income
Prize money
Advertising income
Merchandise income
Endorsement fees
The scheme also applies to transfers of assets such as a plane ticket or accommodation provided for an entertainer. Promoters must deduct tax when paying fees direct to an artist. Alternatively, a promoter can pay an agent gross and the agent then has the responsibility for deducting the tax.

Further Information

The HM Revenue and Customs: http://www.inlandrevenue.gov.uk/
Residents and Non-Residents: Liability to Tax in the United Kingdom at www.inlandrevenue.gov.uk/pdfs/ir20.htm
Residence and Domicile forms at www.inlandrevenue.gov.uk/cnr/r_and_d.htm

The Foreign Entertainers Unit (FEU)
www.hmrc.gov.uk/feu/feu.htm

Centre for Non-Residents
Foreign Entertainers Unit
St Johns House, Merton Road
Bootle
Merseyside
L69 9BB
Tel: +44 (0)151 472 6488
Fax: +44 (0)151 472 6483
Email: non-residents@inlandrevenue.gov.uk

Planet Art eXchange | PAX ArtWork | The Visiting Artist Info & Reseources | Tax