EP NowStoreAcademySupportCommunityProducts by Country
Legal & Compliance Home

Proposed Changes to IR35 Rules: What They Mean for Productions

Proposed changes to the UK IR35 rules could end the double-tax headache that has plagued both production companies and production freelancers for years.
June 16, 2023
EP legal and compliance: Proposed changes to IR35 for productions

While the IR35 rules appear to be here to stay, the UK government has launched a consultation (running from April 27-June 22) which could see the resolution of a flawed tax rule that currently affects both end clients and contractors.

What are the IR35 rules?

The Intermediaries Legislation, known as IR35, aims to identify whether a contractor providing their services through an intermediary (such as a loan-out) carries out their work as a self-employed individual or in a way that reflects an employment arrangement and relationship. Essentially, their contract can be classed as being either inside or outside IR35.

Working outside IR35 means that a contractor is responsible for paying tax as a self-employed person. Working inside IR35 means that they’ll be taxed as an employee for that contract and that the end user (perceived employer) will be responsible for deducting income tax and NICs through PAYE.

What’s the issue?

While the idea behind IR35 makes sense (i.e., that contractors who act and work like employees should pay tax like employees), the way in which the rules have been implemented has caused problems for production companies and freelancers alike.

To maintain IR35 status, contractors can show they are independent of the client’s organisation – for example, by funding their own business costs. But the distinction isn’t always black and white, and this uncertainty can cause issues.

If HRMC deems a contractor to have been incorrectly classed as falling outside IR35, and believes that they were working in the same way as an employee, the end client (i.e., production company) is required to pay the taxes that are owed, even if the contractor has already paid tax on this income. The result is that HMRC receives more tax than it is actually owed.

How does this affect the film and TV industry?

In the film and TV industry, where productions rely heavily on a freelance skillset, laws that determine the relationship between a client and contractor are particularly relevant. As the nature of the work requires specialist individuals to work for short periods, the industry has always relied on contractors for everything from entry-level positions all the way up to senior roles both on screen and behind the scenes. According to the British Film Institute, in 2019 54% of people working in film and video production were self-employed, compared with just 18% of the total UK workforce.

This begs the question: what would these proposed changes mean for our industry?

Thankfully, this development might give hope of predominantly good news for both production companies and contractors.

For production companies, there has always been the risk of double-taxation if HMRC deems the freelancer to be inside IR35. For risk-averse and budget-conscious productions, (if and when it does transpire) the removal of this risk is positive.

The proposals may also provide comfort to production companies that are nervous engaging contractors on outside IR35 contracts, which is good news for production freelancers who want to be treated as self-employed.

However, it’s also important to note that it will be difficult for HMRC to know how much tax has been paid by a contractor, as it depends on a number of factors including their expenses. HMRC may therefore require information from the production company, which would require time and resources to collect.

What next?

While these are only proposed changes, the short consultation window of only eight weeks, followed by a response later this year, is being seen by experts as a sign that they're likely to become law. If successful, the government will implement a legislative solution from April 6, 2024 (i.e., the start of the next tax year).

Keep an eye on the EP Legal and Compliance page for updates. In the meantime, contact EP if you have questions around compliant UK production.

Topic: Legal

Related Content

Pre-employment Checks to Consider Before Contracting Crew on UK Productions

Pre-employment Checks to Consider Before Contracting Crew on UK Productions

8/18/2023
A comprehensive overview of the checks you may like to consider when crewing up on UK productions and what...
Topic: Legal
More
Four panelists discuss co-production-square

Unlocking the Myths and Benefits of Co-Production

2/15/2024
Learn the difference between an official co-production and PSA, and how to leverage these opportunities to...
EP Newsroom-Thumbnail-PGGB

Million Youth Media Wins The Duke of Edinburgh Film & TV Inclusion Award 2024 at PGGB Talent Showcase

2/14/2024
The Duke of Edinburgh Film & TV Inclusion Award presented to Million Youth Media, an organisation offering...
Blue square with white letters and UK flag: Changes to UK Paternity Leave Regulations

Changes to UK Paternity Leave Regulations

1/19/2024
Effective March 8th, modified paternity leave to provide more flexibility for UK fathers.
Topic: Alerts
More
Big Ben, London

5 Things to Consider Before Transitioning to the UK’s New AVEC Regime

1/16/2024
A comprehensive overview to help determine if you should use the UK’s new incentive regime to fund your...
Blue tile stating UK announces minimum wage updates

UK Government Announces Minimum Wage Updates

12/5/2023
National Living Wage and National Minimum Wage rates increase for 2024.

Minnesota: Land of 10,000 Opportunities

11/17/2023
Learn about Minnesota's new incentive program, dynamic locations, strategies for boosting crew training...

Operating a Loan-Out in Canada: A How-to Guide

10/31/2023
What production workers need to know about setting up and operating a loan-out corporation in Canada.
Topic: Canada
More
Master Series Thumbnail Square UK Productions

UK Production: Sites, Services and Studios

10/20/2023
Learn about UK incentives, infrastructure and production innovation spanning from London to Wales,...

Entertainment Partners Makes Commitment to UK Production with Film & TV Partnership Programme

10/12/2023
Find out how EP is partnering with the leading UK training organisations to close the skills gap, increase...
Entertainment Partners Logo Thumbnail-square

NFTS and Entertainment Partners (EP) Establish Partnership to Support the Future of Film and Television Production

10/5/2023
By supporting the National Film and Television School through this new partnership, Entertainment Partners...
Newsroom-Advanced-Television-Logo-Thumbnail

NFTS, Entertainment Partners establish partnership

10/5/2023
EP the entertainment payroll and production technology company joins as a prominent new Patron of the...
British-Cinematographer-Logo-Thumbnail

NFTS and Entertainment Partners (EP) establish partnership

10/5/2023
The National Film and Television School (NFTS) announces a new partnership with Entertainment Partners...
UK Right to Work Penalties to Triple in 2024

UK Right to Work Penalties to Triple in 2024

9/26/2023
Find out how your production can prepare for the increased penalties for employing a worker who doesn't...
Topic: Legal
More
EP Blog_SQUARE_Spread of UK Production

Outside of London: How the UK Production Industry Spread Beyond the Capital

9/21/2023
Film and TV production outside of London (OOL) is now an integral part of the UK, with world-class media...
Topic: UK
More
Expert Advice_Sam Collett

Spotlight: Sam Collett, UK Production Accounting and Incentives Expert

9/19/2023
Meet the Senior Partner at FLB Accountants, an Entertainment Partners company specializing in UK media and...
Master Series_UK Incentives Panel_Square

What's Changing in UK Production Incentives

9/15/2023
Learn about the recent changes to the UK Creative Sector Tax Credits and how they might impact your next...
EP Blog_SQUARE_UK cultural test

Understanding the UK Cultural Test

9/12/2023
Find out whether your film or TV show will pass the UK’s Cultural Test, a key step in qualifying for the...
EP_SQUARE_HMRC Answers

HMRC Answers Key Questions on New UK Audio-Visual Expenditure Credit

8/22/2023
UK Creative Sector Department weighs in on the interpretation of some of the new legislation and guidance...
Woman using a blue and black calculator

Multi-State W2s: Taking Credit for Work State Taxes

8/22/2023
Tax filing guidance for production workers employed in multiple states in the same tax year.
EP Blog_SQUARE_Sustainable UK Studios

The Producer’s Guide to Sustainable UK Studios

8/18/2023
Learn how studios across the UK are taking positive steps to reduce their environmental impact.
Topic: UK
More

New BTL Training Program Launches in New Zealand and Australia

8/16/2023
Entertainment Partners powered by Moneypenny is set to provide much-needed below the line training...
EP Blog_SQUARE_Brian Freesh

Meet the Steadicam Operator

8/8/2023
A conversation with Brian Freesh (‘Babylon,’ ‘Gaslit,’ ‘American Ninja Warrior’)
EP Blog_SQUARE_Changes to UK Tax Credit

Preparing for the Upcoming Changes to the UK Creative Sector Tax Credits

7/25/2023
Understanding the UK's Audio-Visual Expenditure Credit (AVEC), Video Games Expenditure Credit (VGEC), and...

What Does UK Government’s Creative Industries Sector Vision Mean for Film & TV?

7/21/2023
Find out what the UK government’s new Creative Industries Sector Vision means for film and TV...
EP Blog_SQUARE_UK Virtual Production Space

The Producer's Guide to Virtual Production Space in the UK

7/21/2023
A comprehensive overview of virtual production studios which are available to film and TV productions...
Topic: UK
More

Welsh Film & TV Industry Goes from Strength to Strength as Key Partners Pledge Support

6/30/2023
Bad Wolf’s Jane Tranter and other women working in Welsh film and TV recently attended a networking event...

Meet the Director

6/27/2023
A conversation with Brian Dannelly ('Saved,' 'Pushing Daisies,' 'Queer as Folk')

What Expenditure Qualifies for UK Film Tax Relief?

6/21/2023
Find out what constitutes qualifying expenditure under the UK Film Tax Relief.
SQUARE_Step up to Production

EP Partners with PGGB to Deliver Step Up to Production Accountant Programme

6/20/2023
Entertainment Partners and PGGB deliver online training programme for new and aspiring production...
Blog_SQUARE_NY Diversity Incentive

New York Takes Steps to Promote Diversity in Film, Television and Commercial Production

6/20/2023
New legislation in the empire state aims to require production companies to report diversity hiring data,...

Hundreds Sign Up as Background Actors at Liverpool Registration Day

6/16/2023
Entertainment Partners holds open registration day to encourage aspiring film and TV background actors to...
MS_The Future of Background Casting_Square

The Future of Casting Technology

5/31/2023
Learn how the EP Casting Portal can help you streamline casting operations and simplify working with...

Payroll & Finances

PayrollResidualsSmartStartSmartTimeProduction PortalEP On LocationSmartAccountingEP LiveSmartPOCASHétPayPaymaster Rate GuideEP Residency

Manage Multiple Productions

AssetHubSmartHub

Additional Services

Academy
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity
© 2024 Entertainment Partners. All rights reserved.