When a company pays foreign entertainers and/or sportspersons and their personal allowance is exceeded, tax must be deducted, this is called withholding tax.
The company would pay HMRC as a payment on account against the entertainers or sportspersons final UK tax bill.
The company who is engaged with the entertainer or sportsperson must contact the Foreign Entertainers Unit (FEU) and register for withholding tax.
Once registered, form FEU1 will be received from HMRC for each quarterly accounting period, the form and payment must be sent to HMRC within 14 days of the quarter end.
For payments over the personal allowance, tax should be deducted at the UK base rate of income tax, the current rate for the tax year 5 April 2020 being 20%.
If you’ve deducted tax from a payment made to a foreign entertainer / sportsperson, form FEU2 should be completed and provided to them.
If withholding tax is not deducted and paid correctly then payments may have to be made from your own funds and if payments are late interest may be changed.
If the foreign entertainers and sportspersons payments are part of a chain then each person’s making a payment must deduct withholding tax.
If your company pays foreign entertainers and/or sportspersons and you’re not registered for withholding tax then please get in touch and we would be happy to review and if required assist with registering the company with the FEU.