Mini Budget; Big Changes: What the UK Government’s Growth Plan Means for Production
On September 23, 2022 new UK Chancellor Kwasi Kwarteng announced his Growth Plan – also known as the “mini budget” – which, ironically, constitutes a pretty big shake up of the UK tax regime.
Here’s a round-up of some of the key changes affecting the production industry.
Reversal of IR35 reforms
Arguably the biggest announcement for the production industry is the government’s decision to repeal the IR35 reforms which came into force in the public sector in 2017 and the private sector in 2021.
These reforms shifted the burden of applying the IR35 rules from individuals to employers. Under the reforms, employers are responsible for determining a contractor’s employment status and – if they’re deemed to be employed for tax purposes – for making deductions for income tax and national insurance contributions (NICs) and for paying these to HMRC.
The government has announced that these reforms will be repealed starting April 2023. From that date, a person providing their services through an intermediary (such as a loan out) will once again be responsible for determining their own employment status and paying the correct amount of tax and NICs. Please review the announcement and/or seek the advice of employment counsel for further information.
These reforms had a significant impact on the predominantly freelance production industry, so this change will likely be welcomed.
In keeping with Prime Minister Liz Truss’s promises to slash taxes, the 1.25% increase in NICs introduced in April will be reversed from November 6, 2022. Further, the new 1.25% health and social care levy – which was set to be introduced in April 2023 – has been scrapped.
Income tax will also be reduced: the basic rate is due to be cut from 20% to 19% from April 2023, instead of April 2024 as previously planned.
In his original announcement, Kwarteng advised that the higher rate of 45% – paid on earnings above £150,000 – would be abolished from April 2023. However, following widespread backlash, this aspect of the Growth Plan has now been abandoned.
As the planned changes will affect take-home pay, productions are advised to communicate them to crew ahead of time. The messaging around the 1.25% increase in NICs, which HMRC requested be included on all payslips, will also need to be removed beginning November 6th.
Support for those over 50 returning to work
The government has also announced additional support to help Universal Credit claimants over the age of 50 return to the workforce. According to the Department for Work and Pensions, this age group has seen a decline in employment rates over the past year.
This announcement is good news for the production industry, which is facing an acute talent shortage. Recent research by the Film and TV Charity revealed that the UK film and TV industry could attract an additional 35,000 workers if it increased its retention of those over the age of 50. With productions struggling to find experienced crew, any government support to help this age group re-enter the workforce is well timed.
How EP can help
As UK payroll tax legislation continues to evolve, the EP team wants to make sure you understand how it impacts your production. If you ever have questions or need support, please don’t hesitate to reach out to us.