UK Payroll Fringes Explained: A Guide for Production Accountants

Production payroll is complex with a narrow margin for error. And for global productions operating in different countries, each with its own laws and rules around how payroll is managed, there’s even more to navigate.

If you’re a US-based producer or production accountant planning a shoot in the UK, you’ll quickly discover that managing payroll across borders isn’t just about converting dollars to pounds. It’s about navigating a whole new set of rules and costs, including payroll fringes.

While the concept of fringes exists on both sides of the Atlantic, the types of expense, how they’re calculated, and how they apply vary significantly. Understanding key differences is essential, both for accurate budgeting and staying compliant with UK employment law.

Read on to learn about the main UK payroll fringes, how they differ from US fringes, and how production accountants can plan ahead to keep their payroll budget on track.

What are the main UK payroll fringes?

‘Payroll fringes’ refer to additional costs employers incur on top of an employee’s base pay. In the US, fringes include things like health insurance, retirement contributions, and union pension and health plans, especially in film and TV.

In the UK, productions are subject to three main payroll fringes:

1. Employers’ National Insurance Contributions

What are NICs? 

National Insurance Contributions (NICs)—the UK equivalent of a payroll tax—are used to fund state benefits such as healthcare (through the National Health Service) and pensions. Much like Social Security and Medicare in the US, NICs help to sustain public welfare systems.

Employers are responsible for deducting NICs from employees’ earnings and paying them over to HMRC (the UK government body responsible for collecting taxes) each month.

Who do NICs apply to?

NICs comprise two parts: employees’ NICs (deducted from their gross wages) and employers’ NICs (a cost borne by the employer). While NICs are payable on employee earnings, they are generally not payable on payments made to self-employed freelancers. This is a key distinction for US productions, where many crew members work under loan-out companies (personal companies that “loan out” an individual’s services) or personal service corporations (PSCs).
 
In the UK, employment status must be assessed carefully because there are nuances. For example, you may not expect a foreign crew member who enters the UK on a visitor visa for a location shoot to trigger NIC obligations, but eligibility is determined based on the worker’s contractual relationship with the UK entity, not just their immigration status.

A good rule of thumb? Never assume. Follow HMRC guidelines, ask your payroll provider for advice, and always keep solid documentation on hand.

What is the current NIC rate?

At the beginning of 2025, the standard employers’ NI rate was 13.8% on earnings above the secondary threshold (previously £9,100 annually; now reduced to £5,000 annually). However, on April 6, 2025, the employers’ NI rate increased to 15%. This means employers had to start paying NICs on a larger portion of their employees' income, significantly impacting production budgets.

How do NICs impact UK production budgets?

It’s important to build employers’ NICs into your production budgets and do due diligence to verify how many employees will be eligible. Proper worker classification is critical. If you assume crew members are exempt from NICs, but HMRC disagrees, your production could face significant back payments and penalties.

To mitigate risk, use HMRC’s Check Employment Status for Tax (CEST) tool early in the hiring process to avoid surprises. Also, be sure to keep detailed records. UK authorities place a strong emphasis on documentation during audits and investigations.

2. Apprenticeship Levy
 
What is the Apprenticeship Levy?

Introduced in 2017, the Apprenticeship Levy is a government initiative aimed at funding apprenticeship programs across the UK. 

Why does the Apprenticeship Levy exist?

This Apprenticeship Levy supports skills development and career training. Eligible employers can access the Apprenticeship Levy funds they’ve paid to help fund on-the-job training for new entrants to the industry. Consider using these funds to build your crew pipeline and support future talent development.

Who does the Apprenticeship Levy apply to?

The Apprenticeship Levy applies to employers with an annual UK payroll bill over £3 million. While smaller independent productions will often be exempt, larger studios or companies running multiple projects concurrently may cross the threshold.

What is the current Apprenticeship Levy rate?

The current Apprenticeship Levy rate is 0.5% of the total UK payroll bill over the £3 million threshold. If you’re part of a larger studio umbrella or managing multiple projects, assess your cumulative payroll exposure early. Even if one production doesn’t trigger the levy, your combined operations might.

How does the Apprenticeship Levy impact UK production budgets?

While this levy typically doesn’t affect smaller productions, larger studios and groups managing multiple projects need to factor in this additional cost to avoid unexpected budget hits.

3. Auto-enrolment pension

What is auto-enrolment pension?

Auto-enrolment is the UK’s mandatory workplace pension program. Employers must automatically enroll eligible employees into a pension scheme and make minimum contributions.

Who does auto-enrolment pension apply to?

By law, every employer with at least one employee must enroll eligible employees into a workplace pension scheme and contribute toward it (although limited exceptions apply).
 
Employees are considered eligible for auto-enrolment if they:

• Are classed as a worker;
• Are between 22 years old and the State Pension age;
• Earn at least £192 per week (£10,000 per year); and
• Usually (‘ordinarily’) work in the UK.

You must inform all employees by letter that you operate a pension scheme. Note that the auto-enrolment applies to employees only; it excludes self-employed contractors and loan-out companies. This is in contrast to the US, where unionized crew members often receive pension contributions regardless of their employment status.

What are the current pension rates?

Production accountants calculate legal minimum contributions based on a worker’s earnings within a specific range (currently, gross earnings between £6,240 and £50,270). Employers must make a minimum contribution of 3%, while employees must make a minimum contribution of 5%, typically deducted from wages.
 
Qualifying earnings typically include:

• Salary;
• Overtime;
• Allowances;
• Bonuses;
• Commissions;
• Statutory Holiday Pay;
• Statutory Sick Pay; and
• Statutory Paternity, Maternity and Adoption Pay.

Be sure to account for all applicable earnings when calculating contributions.

Note that this cost is not optional. If your production engages UK-based employees—even on short-term contracts—you must comply with your pension obligations.
 
Employers do have the option to postpone auto-enrolment for up to three months (13 weeks) after a worker becomes eligible, but must notify the worker in writing and allow them to opt in during this period if they choose. Postponement can be helpful for short-term contracts or probation periods. Crew members can also opt out, but must do so in writing (to the pension provider, not the payroll provider) after enrolment.

Budgeting tip: For productions with lots of UK hires, auto-enrolment can be a significant hidden cost. Be sure to factor pension contributions into your fringe calculations. It’s also important to observe the rules around pensions auto-enrolment carefully, as penalties may apply for non-compliance (including enforcement action and fines).

Understanding each of these fringes and how they apply to your cast and crew can help you avoid costly surprises.

Additional considerations when paying US cast members on UK productions

In addition to the above, if you’re working on a UK-based shoot, it’s essential to understand how cast members are treated under UK tax law. While many crew roles follow familiar payroll procedures, performers fall under a distinct set of guidelines which require careful attention. 

Employment status

In the UK, cast members are usually considered self-employed for tax purposes under HMRC’s list of roles normally treated as self-employed in the production world—also known as “Appendix 1”—(although determining status is fact-specific and must be done on a case-by-case basis). This is different to how cast members are treated in the US, so it’s important to take note from a budgeting perspective.

Where HMRC guidance supports self-employed status, cast members are responsible for managing and filing their own taxes and should not be processed through standard PAYE payroll. Instead, they must be treated as independent contractors, with appropriate documentation retained to support their self-employed status.

Treating cast members correctly under UK tax law is not just a matter of regulatory compliance—it’s a key part of maintaining smooth financial operations on international shoots. By understanding these distinctions and acting proactively, production accountants can protect their production from liability and ensure that cast members are properly informed and supported in meeting their own tax responsibilities.

Withholding tax

Another requirement which can catch production accountants off guard is the need to deduct tax from payments to overseas performers.

Hiring international talent—such as actors or dancers—can trigger specific tax responsibilities under Section 555 of the Income and Corporation Taxes Act 1988. When working with non-resident performers, HMRC may require the production to apply a Withholding Tax to their earnings. This obligation remains in place even if the payment is made through an agent or intermediary. The tax is generally deducted at the standard UK income tax rate and must be paid directly to HMRC.

To stay compliant, production accountants should reach out to HMRC’s Foreign Entertainers Unit (FEU) as soon as an overseas performer is contracted. The FEU offers detailed advice on whether Withholding Tax is applicable, how to calculate the correct amount, and what paperwork needs to be submitted. Engaging with the FEU early in the process helps to prevent administrative delays, financial penalties, and complications with tax reporting.

Union contributions

Production accountants play a vital role in ensuring union compliance when cast and crew are engaged on UK productions. These responsibilities begin with contract compliance and ensuring that all agreements align with the correct union; for performers, this is Equity for UK-based productions and SAG-AFTRA if the production is a signatory to that union. For foreign performers, particularly SAG-AFTRA members working in the UK, production accountants must verify whether the performer has obtained a Global Rule One waiver, which allows them to work under a non-SAG-AFTRA contract abroad.

Production accountants must also ensure that they calculate and process union-mandated minimum rates, overtime, and residuals correctly. For performers working under Equity contracts, contributions must be sent to the Equity Pension Scheme, ensuring that employer payments are made and that performers have opted in where applicable. In addition, SAG-AFTRA members working on SAG-AFTRA signatory productions require contributions be made to their Health & Pension plans, which must be correctly calculated and submitted.

Holiday pay

When engaging actors in the UK, it’s important to understand how holiday pay is handled under Equity contracts. According to Equity guidance, performers are often classified as “workers” even if they’re self-employed for tax purposes. Where this classification applies, such workers would be legally entitled to paid holiday (specifically, 5.6 weeks per year).

As it’s rare for performers to take actual time off during a short-term contract, holiday entitlement is typically paid out as an additional financial amount. The standard rate is 12.07% of gross pay, which reflects the statutory annual leave entitlement. However, it’s important to note that while holiday pay is a statutory right for individual workers and employees, it is not paid to PSCs or loan-outs as these entities are not classified as workers under employment law. Therefore, when an actor is engaged via a loan-out, the company—not the individual—is the contracting party and holiday pay does not apply.

Mind the gap: key differences between UK and US film and TV payroll

Even experienced US production accountants can hit unexpected snags when managing UK payroll.
 
Here’s a list of the key differences which can cause the most confusion:

• There is no US workers’ compensation fringe equivalent in the UK: in the US, Workers’ Compensation insurance, typically calculated as a fringe percentage, is a major cost to cover workplace injuries. In the UK, there’s no direct equivalent to US-style Workers’ Compensation insurance. Instead, mandatory Employers’ Liability Insurance, which is not treated as a payroll fringe, covers workplace injury claims.
• Cast members are typically considered self-employed workers: this means that they are responsible for managing and filing their own taxes and should not be processed through standard PAYE payroll (although they are typically entitled to holiday pay unless operating under a PSC or loan-out). Productions must maintain the required documents to support these workers’ self-employed status with HMRC. You’ll also need to check whether withholding tax applies.
• Regular employment status assessments are critical: unlike the US, where loan-out companies are common and often accepted without scrutiny, the UK takes employment status seriously. HMRC expects a proper employment status determination for every worker. Misclassifying employees can lead to significant fines, back taxes, and potential reputational damage. It’s always best to conduct thorough employment status reviews for every hire—and this isn’t a simple box-ticking exercise. UK authorities regularly audit productions for compliance and expect to see comprehensive records. If you’re unsure about a worker’s classification, consult local payroll experts to avoid costly compliance errors.
• Pension rules differ significantly: in the US, pension and health contributions are often governed by union agreements, and contributions may still apply even for loan-out companies. In the UK, auto-enrolment pension applies only to employees. If you’re hiring directly through PSCs or freelancers, these fringe costs might not apply, but verifying status is critical to avoid accidental non-compliance.
• Cross-border union rules may apply: depending on the worker, and the production, UK or US union rules may apply to people working on UK productions. Make sure that your contracts align with the relevant rules and that you calculate and process union-mandated payments correctly. You’ll also need to check whether a Global Rule One waiver exists for SAG-AFTRA workers looking to work under a non-SAG-AFTRA contract in the UK.

Stay ahead of the payroll fringe plotline

When it comes to international productions, small payroll oversights can turn into big budget headaches. By understanding the key UK payroll fringes, you’ll be better prepared to budget accurately, stay compliant, and keep your production running smoothly.
 
Thankfully, navigating UK payroll fringes isn't something you have to figure out on your own.
 
EP’s expert global payroll team can help you to simplify your payroll and stay compliant with local laws and regulations. Get in touch today to find out more.

This article contains general information we are providing on a subject that may be of interest to you. Nothing in this article should be considered tax, accounting, or legal advice. You should consult with your own tax, accounting, or legal advisors regarding the applicability of this information to your specific circumstances.