Happy New (Tax) Year!

Ah, January. The time when the holidays are gone, pantos are finally over, and the industry seems to slowly shake off the stupor that set in some time late November and start to look towards new projects. Many of us will have made New Year’s resolutions around our career – this is the year we are going to change agent/get into corporate roleplay/snag that big audition at the National. Which is awesome. But while we are all looking hopefully towards a fresh start in for the fresh new year, January signals another important event: tax time.

For many of the AAUK membership, this relates to one country only. The UK tax year runs from April to April, with self-employed tax returns due by January 31. It’s pretty hard to ignore this by now, given the billboards and radio ads urging everyone to file and pay by the deadline, so by and large everyone knows (or should know) the routine of sorting invoices, expenses, and bank details to deal with this. However, it’s the stuff you don’t know that may get you.

For example, buried deep in Chancellor George Osborne’s autumn statement was the news that from 2020, businesses and self-employed workers (i.e. us) will be forced to file tax returns four times a year online. This has sparked a public outcry and, as the result of an online petition, is due to be debated later in January, but if it goes ahead, this will affect everyone who earns over £11,000 a year of self-employed income. Oh, what fun that will be if it is put into practice.

That’s just the UK. What if, like many AAUK members, you are American, or hold a green card, or have ever in your life worked in the USA? Then you will have to file a U.S. tax return too. The U.S. tax year, unlike the UK, runs from January to December, so has just finished; though returns are due in April, those living abroad can easily apply for an extension. Note that you don’t have to be a U.S. citizen to fall into this category, you just have to have lived and worked over there at some point. There is a tax agreement between the States and the UK which allows you to be exempt from U.S. tax on up to about $100,000 of earned income per year, but a) that’s dollars, not pounds, so if the pound is strong and you’ve had a good year with an ad or two or a long-running West End show, you might find yourself caught; and b) regardless of whether you owe tax  or not, you still have to file. And just in case you were thinking, ah, they’ll never know, as of January 1, 2016 a new law is due to be signed in that would allow the U.S. State Department to revoke or deny the passport of any U.S. citizen deemed by the IRS to be delinquent on their tax debt. Not something you want to discover at the airport on your way to shoot that dream job.

Americans also need to file the FBAR  (Foreign Bank Account Report) if you have more than $10,000 aggregate in bank accounts/ISAs/pension/bonds/etc. based outside the USA - which for many of us, is most, if not all, of our accounts. At current exchange rates, that means if your accounts add up to £7015 or more, regardless of whether you are overdrawn on others, you need to file the FBAR by June, no extensions granted. Oh, and possibly FATCA too, with your taxes. Keeping up?

If all of this has made you wonder whether it would simply be easier to apply for UK citizenship and renounce your U.S. passport, there are all sorts of traps there, too. Not only is it a serious decision with longterm implications, the UK may not necessarily be willing to accept you as a citizen. In order to qualify for UK Indefinite Leave to Remain or citizenship as a non-EU national, you need to have been living in the UK for at least five years. However, from April of this year, if you are a non-EU immigrant, have been here for over five years, and don’t consistently earn over £35,000 a year, your right to work may be terminated and you could be expected to leave within a year. Again, there is a petition against this legislation, as certain industries will be badly affected – not just actors, musicians, and dancers, but teachers, nurses, and researchers, for example – but with pressure on the government to bring down immigration numbers, there is no guarantee it will be revoked.

So what is to be done in the face of all this scary information? First of all, don’t panic, get informed. Find a good accountant who is familiar with U.S. and UK tax regulations, and have a chat with them about your own situation. Usually, they will be able to put your mind at rest and help you sort out any paperwork that needs attending to. Make sure everything is up-to-date. Check the various governmental websites, to find out about any legislation that may affect you. Whatever you do, don’t ignore this stuff; don’t think, oh, I’m an actor, I’m self-employed, I’m too young, I’m too old, they won’t be interested in me, I just want to work on my craft. Things are getting crazier for nationals living and working abroad, and it should be part of your business plan to be aware of how you might be affected.

The good news is, once you’ve dealt with these issues and put a structure in place, you can focus on other, more interesting goals for the new year, like learning how to make a decent self-tape. Remember, working in the entertainment industry is a career like any other, which means with it come the responsibilities of being in business. Make sure your career plan includes dealing with tax and administration issues, use the resources offered by organizations such as Equity and AAUK, and you’ll be in a stronger position to have a long-lasting career, wherever you are based.

Happy 2016!