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20 IR35 Terms Every Production Worker Should Know

Find out how to apply the UK’s IR35 rules to your film and TV productions with this helpful overview.
May 28, 2024
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Think you know your loan-out from your Lorimer Letter? Here’s your quick guide to everything from basic terminology to complex legal language.

It’s been three years since the IR35 rules came into force for small and medium-sized companies in the UK production industry, but the thought of getting it wrong can still cause anxiety for production teams.

If you’re looking to refresh your knowledge of the key principles of the law, here are some of the common terms and phrases you need to know.

IR35

Let’s start at the very beginning. The term “IR35” is now common in the UK, but what does it actually mean? In a nutshell, the IR35 rules are anti-tax avoidance tax legislation which aim to ensure that individuals who work like employees pay broadly the same tax as employees, regardless of how they’re set up to work. 

HMRC 

Her Majesty’s Revenue & Customs is the UK government body responsible for collecting taxes, paying some forms of state support and administering other regulatory regimes, including the national minimum wage and the issuance of national insurance numbers.

National Insurance Contributions 

Also known as “NICs”, these are a tax that help to pay for, and give payees entitlement to, some state benefits, such as universal healthcare, state pension and unemployment benefits. 

Pay As You Earn 

Or “PAYE” is an HMRC system where income tax and NICs are deducted from an employee’s salary by the employer.

Employed

Under UK law, a crew member will be deemed “employed” if they have an employment contract and work for a salary under the employer’s control and supervision. Employees have certain rights and protections, such as a minimum wage, employer pension contributions, sick leave, paid holiday and maternity and paternity leave. Employers must deduct income tax and NICs from an employee’s earnings and pay them to HMRC on their behalf.

Self-employed

For tax purposes, a crew member will be deemed "self-employed" if they are a contractor who is in business for themselves and provides their services independently (e.g., a person who works with other clients, is responsible for the success or failure of their business and is required to pay for any business assets, running costs and tools and equipment).

Self-employed individuals have more freedoms than employees – for example, deciding what work to do and when and where to do it. However, they also have less rights and protections and are responsible for paying their own income tax and NICs to HMRC.

End Client 

For the purposes of IR35, an end client is the organisation in a supply chain that ultimately receives a contractor’s services. They will also be the employer of any employees and will be responsible for deducting income tax and NICs on their behalf. The end client in a production chain may not always be clear; with special purpose vehicles (SPVs), casting agencies, production companies and studios to consider, the supply chain can be complex. The end client for contractors may also vary from production to production. For these reasons, risk assessments, alongside HMRC’s guidance, are useful tools to avoid being caught out. 

Fee Payer 

The fee payer is the party in a supply chain which pays the contractor, loan-out, limited company or other intermediary (this may or may not be the end client). If the contractor is deemed employed for tax purposes, the fee payer is also responsible for deducting income tax and NICs and paying them to HMRC on their behalf. Contractors may be hired by the SPV for lighting or costume but be paid their fees by the production company. In this instance, the end client and fee payer may be two separate entities and, therefore, the responsibilities will differ.  

Intermediary 

An intermediary is usually a company that a contractor controls, also known as  a “personal service company,” “loan-out” or “limited company.”

Personal Service Company 

Also known as a “PSC”, a personal service company is a limited company set up by a contractor to provide their services to clients. A company must meet certain statutory criteria to be considered a PSC – specifically, it must be a limited company in which the contractor holds a material interest, such as a 5% stake or more in the company’s share capital. 

Loan-out 

This is an industry-specific term for a contractor’s PSC. The name comes from the fact that under this arrangement, productions hire positions – usually actors or department heads – through a separate company rather than hiring them as an employee (so the PSC is effectively “loaning” the individual to the production company).

Schedule D 

This is an older term which is sometimes still used in production to refer to someone who is self-employed.

Appendix 1

HMRC has issued a list of roles normally treated as self-employed in the production world. This was originally called “Appendix 1” and continues to be colloquially known as such. Appendix 1 provides the media sector with a list of behind the camera roles, each with a specific set of conditions which, where those conditions are met, HMRC will accept as self-employed for tax purposes. 

It’s important to note that this list doesn’t cover all roles, nor does it automatically mean that a contractor is self-employed if their role is on the list. For that reason, end clients cannot rely on Appendix 1 alone and must still perform their own IR35 assessments.

Lorimer Letter

There are some behind camera contractors that don’t appear on Appendix 1 but work on a series of short-term engagements with a large number of clients. These contractors can be treated as self-employed in certain circumstances but HMRC must provide a Letter of Authority, also known as a “Lorimer Letter” or “LP10”, to say that they are self-employed. 

Lorimer Letters only cover a specified period and detail particular engagements. And as HMRC has limited capacity to issue these letters, they are rare. 

Seven-day Rule 

A rule that states that when a contractor is engaged for six days or less, the end client doesn’t need to deduct income tax, but they do pay NICs. 

Inside IR35 

“Inside IR35” is a term for when a contractor is considered, for tax purposes, an employee or deemed employee of the end client and subject to PAYE.

Outside IR35 

Conversely, “outside IR35” is a term for a contractor who is considered self-employed, operates as their own business and is responsible for paying their own income tax and NICs.                   

Companies that engage contractors through intermediaries are responsible for applying the IR35 rules and assessing whether they are inside or outside IR35.

Off-payroll Working 

Also known as “IR35”, this is how HMRC describes the situation where a person provides services through a PSC to an end client.

Check Employment Status for Tax 

Or “CEST” is HMRC’s digital tool to help companies decide whether a contractor should be classed as employed or self-employed for tax purposes. This tool is not specific to any particular industry; it is meant as a broad tool for all kinds of companies to use.

Status Determination Statement

After you’ve carried out an IR35 assessment, you’ll need to give the contractor a status determination statement (or “SDS” before they start work). This shows their tax status (i.e., whether they are inside or outside IR35) and reasons for the assessment. 

Looking for more information on contracting crew in the UK? 

See our comprehensive guide or contact our expert team for answers. We’re always happy to help!

This article contains general definitions which may differ with respect to your particular situations. We recommend that you consult with your outside advisors before applying any of these terms to your specific situations.

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