IR35: Tax Rules for Freelancers

In January 2020 HMRC published rules governing the taxation of freelancers in the film and TV industry.

These new rules confirm that directors are self-employed for tax purposes, and they also scrap the rule which meant that employers had to put freelancers on to PAYE for any engagement lasting longer than nine months.

Self-employed tax status has been an issue ever since the Government introduced IR35 tax rules in 2017, which stated that employers must decide whether a freelancer providing their services via a personal services or “loan-out” company would – if they were not doing so – be judged to be PAYE for tax purposes. HMRC has been pursuing court cases against some freelancers – mostly presenters – under those rules. The latest rules now confirm that directors are one of a large number of freelance roles in film and TV which are considered to be self-employed for tax purposes.

The nine-month rule had led to a practice where most employers would avoid employing a freelance director for more than nine months in any year, in order to avoid having to put them on to PAYE. For many directors, especially those working in continuing drama, this amounted to an enforced period of three months unemployment each year.