For UK tax resident entertainers and athletes, UK tax is done in a very similar way to any other UK tax resident. The entertainer and athlete will be subject to UK taxes on any income and capital gains, irrespective of where it is earned.
However, for foreign entertainers and sportspersons, UK tax might be a more complicated additional liability. Foreign entertainers and sportspersons are liable to pay UK tax on all earning linked to appearances in the UK. All UK linked earnings over the UK personal tax allowance (The standard Personal Allowance is £12,570, to date), will be deducted at the UK basic rate of Income Tax. Please note in many cases, a 20% tax is withheld on performance fees. Depending on the entertainer or athlete’s tax liability, they might be entitled to recover any unpaid monies or pay tax on top.
Foreign entertainers and sportspersons can be happy to note that expenses that are wholly and exclusively linked to their UK performance can be reduced from their income before tax is calculated.
Following the government’s guidance, expense deductions are usually allowed for:
- production and pre-production costs
- food and drink
- fees or commission to managers and agents
- travel in the UK
- air fares directly to and from your home country for a UK performance
- support staff
- use of training facilities
- other expenses agreed with HMRC
Foreign athletes will also be subject to tax on their worldwide activities. For example, endorsement and sponsorship income. This is calculated by the athlete (calculation used must be approved by HMRC and supported by evidence). Essentially, the athlete must calculate how many days they have spent performing or training in the UK compared to outside the UK. Then, they must pay tax on that proportion of endorsement and sponsorship income.
One significant note to point out is that double taxation relief might be available in the entertainer or athlete’s country of residence. All foreign entertainers and athletes should check if their country of residence has a double-taxation agreement with the UK. This will avoid the entertainer or athlete paying tax to both the UK and their country of residence.
For further information on this topic or on any other legal area, please contact John Szepietowski or Kay Stewart at Audley Chaucer Solicitors on 01372 303444 or email email@example.com or visit our Linkedin page.
This information was correct as at July 2022