How to apply for a reduced rate of withholding tax, and work out the tax due on worldwide earnings.
If you’re a foreign entertainer or sportsperson appearing in the UK, you’re liable to pay UK tax on earnings linked to those appearances.
If payments to you are more than the UK personal tax allowance, the person who pays you will deduct tax in advance and pay it to HM Revenue and Customs (HMRC).
This is called withholding tax and is usually deducted at the UK basic rate of Income Tax.
This advance payment is known as payment on account. It can be used as payment towards your final tax bill in the UK and, in most cases, your home country.
You’ll receive an FEU2 tax deduction certificate from the person paying you. This will show the tax deducted from the payment.
Make a reduced tax payment application
You or your authorised representative can apply to pay a reduced rate of withholding tax, so the amount of tax you pay is closer to your expected final tax bill.
To make a reduced tax payment application, you should apply by post using form FEU8 at least 30 days before the payment is due.
An application is needed for each tour or visit to the UK. If an appearance is added or cancelled, you must send a new FEU8 to HMRC.
You don’t need to send anything with your application unless we ask you to, we’ll write to you if we require further information.
Examples of the types of information we may ask for are shown below.
You should provide a filming schedule, showing the dates when you were involved in principal photography.
Your UK tax bill will be worked out using the number of UK filming days divided by the number of worldwide filming days.
Any future payments connected to the UK filming will be subject to UK tax in the same way as the original payment. This can include:
- deferred payments
- contingency payments
- residual payments
Performing companies and groups
Your application should include:
- a statement confirming the employment status of the performers
- copies of some performers’ contracts
- a list of all performers that took part, including their nationality and country of residence
- the total amount (or pro-rata monthly share) paid to each performer
- details of fees, or shares of the profit, paid to each performer
- details of all expenses paid to your performers in relation to UK performances
- copies of any separate agreements or contracts with conductors, soloists or any others who make public appearances on stage
Musicians and bands
Your application should include a copy of the engagement contract with the UK venue and promoter.
When working out your income from UK performances you should include payments from:
- the sale of merchandising at venues
- non-recoverable record company support
- performances, and the filming or recording of them
- miscellaneous income from television and radio, such as appearances linked with touring
- flat rate fees for recording
- promotion payments, for example from record companies
Promotion payments can be exempt from expenses paid, as they’re likely to be allowable for UK tax purposes.
Don’t include payments from:
- recordings where the payments are worked out on the number of units sold
- sales of merchandising at retail outlets unconnected with the performing activity
If you don’t know how much you’ll earn until your performance is finished (for example, a final position in a tournament), you may not be able to make a reduced tax payment application.
Any expenses paid to you (such as travel costs) count as income and may be subject to tax.
Expenses that are wholly and exclusively in connection with a UK performance may be deducted from your income before tax is calculated.
Expenses deductions are usually allowed for:
- production and pre-production costs
- food and drink
- fees or commission to managers and agents
- travel in the UK
- air fares directly to and from your home country for a UK performance
- support staff
- use of training facilities
- other expenses agreed with HMRC
Expenses for medical treatment, personal security or entertaining aren’t usually allowed.
If you receive expenses or income to cover both UK and non-UK activities, a proportion will be allocated for appearances in the UK.
If entertainers’ touring activity is linked with an album release, HMRC may match or divide expenses into different income streams.
Expenses that aren’t wholly and exclusively for the purposes of the UK performances will be disallowed.
If the tax withheld is less than the actual amount you owe in a tax year, you must tell HMRC by 5 October of the next tax year.
You need to do this every year. If you don’t tell us about additional tax due in any tax year, you may be charged a penalty.
You should complete a UK Self Assessment tax return if:
- HMRC asks you to
- the withholding tax deducted from your performance income is less than your total liability to UK tax for the tax year
Before you complete your Self Assessment tax return, you should read the HS303 Self Assessment helpsheet.
Payments for worldwide sporting activities
You’ll be taxed on a proportion of your earnings from worldwide sporting activities based on your time spent in the UK.
A share of endorsement or sponsorship income, for example, is chargeable to UK tax.
The amount of your income you’ll pay UK tax on will depend on:
- the precise wording of your contract
- how much time you spend performing and training in the UK
The calculation you use must be approved by HMRC and supported by evidence.
Work out your endorsement income
HMRC recommends using either the Relevant Performance Days (RPD) method or the Relevant Performance and Training Days (RPTD) method.
If you use a different method, provide your reasons why with supporting evidence.
Relevant performance days
Private activity won’t count as a performance day, but it may count as a training day.
Public activity won’t count as a training day, but it may count as a performance day.
A day on which you train and compete only counts once, and always counts as a performance day.
An RPD is any day on which you:
- take part in a competition
- practise your given sport in public (for example a tennis player practising on an open court where the public can watch)
- undertake a public event for your sponsors (for example taking part in a photo session wearing or using your sponsor’s kit or equipment)
Relevant training days
A relevant training day is any day on which you spend 3 or more hours in physical activity. The sporting or training activity should contribute towards the performance of your sport.
Training must include physical activity and each session should last 1 hour or more to count towards the 3 hour requirement.
A training session may be:
- practising the sport you’re endorsed for
- maintaining general fitness, such as spending time in a gym or road running
Don’t include time spent:
- injured, or when training isn’t possible
- resting, or on holiday
- doing non-physical training, such as sports psychology or physiotherapy
A swimmer’s routine in the build up to a competition is to swim for one hour then spend one hour in the gym twice a day. These days count as training days.
Every other day of the year she swims for 45 minutes, rests, then spends one hour training in the gym and 45 minutes completing training journals or at physiotherapy or sports psychology appointments.
These days don’t count as training days.
Use the RPD method to work out taxable endorsement income
You can calculate the amount of your endorsement that you need to pay UK tax on by:
- Adding together all RPD, both worldwide and in the UK.
- Dividing the number of UK RPD by the number of worldwide RPD.
- Multiplying your endorsement income by the result of step 2.
Trevor is a swimmer who lives outside the UK. He has an endorsement contract with a sports company that pays him £100,000 for competing and attending promotional events.
He has another contract with a breakfast cereal manufacturer that pays him £200,000 for competing and attending promotional events.
During the tax year he has a total of 18 performance days. Three of these are in the UK.
He also attends 1 promotional event outside the UK for the sports company and 2 for the cereal company. They both count as promotional performance days.
Trevor uses the RPD method to work out how much UK tax he needs to pay by:
- Adding the UK performance days and the UK promotional days.
- Adding the total of all performance days and promotional days.
- Dividing the result of step 1 by the result of step 2.
- Multiplying the result of step 3 by the amount of income from his endorsement contract.
The amount of income from the sports company that Trevor must pay UK tax on is:
3 ÷ 19 × 100,000 = £15,789
The amount of income from the breakfast cereal company that Trevor must pay UK tax on is:
3 ÷ 20 × 200,000 = £30,000
Use the RPTD method to work out taxable endorsement income
You can calculate the amount of your endorsement that you need to pay UK tax on by:
- Dividing the number of total UK RPTD by the total worldwide RPTD.
- Multiplying the total worldwide earnings from your endorsement contract by the result of step 1.
Alice is a table tennis player who lives outside the UK. She earns £20,000 from an endorsement contract from a sports company for competing in tournaments.
She had 175 training days during the tax year, and 90 of those were in the UK.
She also had 40 competition days, with 5 of those in the UK Championships.
Alice uses the RPTD method to work out how much UK tax she needs to pay by:
- Dividing the number of UK RPTD by the total number of RPTD.
- Multiplying the result of step 1 by the amount of income from her endorsement contract.
The amount of income that Alice must pay UK tax on is:
95 ÷ 215 x 20,000 = £8,837
Complete your training records at the time, which identify the type and duration of training. You should also show where the training or competition took place.
This could include copies of:
- competition agreements
- training diaries
- practise and competition schedules
- a daily log of training
- other daily records
Apply for a refund
If you think you’ve paid too much withholding tax, you can make a claim for a repayment at the end of the tax year.
You can apply for a refund by sending the following information to HMRC:
- the original FEU2 certificate issued to you
- details of expenses related to your UK performances
- a copy of the contract between you and the payer
- details of any other UK income received during the tax year
- your full name and personal address
- your nationality and country of residence
- a signed declaration of who the repayment cheque should be made payable to
- the address we should send the repayment cheque to
You don’t need to include a street name or PO box when writing to this address.
Charities Savings and International 1
If your claim is more complex then you may be asked to complete a Self Assessment tax return.