Performing arts workers may miss out on the state pension
This is because the government plans to reform how the self-employed are taxed. A government spokesperson says: “To modernise the outdated and complex self-employed national insurance system for millions of people, Class 2 national insurance contributions (NICs) will be abolished in April 2018. This represents a tax cut for 3.4 million self-employed people of £134 on average per year.”
However, while this means those who earn £5,965 or more will no longer have to pay £2.80 a week in Class 2 national insurance contributions, those who earn less may face a hike of over 400% to the voluntary contributions they pay, which are needed to be eligible for the state pension. This is because they'll have to pay for the pricier Class 3 contributions at £14.10 a week instead.
- See How the self-employed may miss out on the state pension for more detailed information on how this will work.
A survey carried out by trade union for performers, Equity, in 2013 suggests that the median income of its members from self-employed performance work was around £10,000 a year, which means many will earn less than the £5,965 threshold.
It wrote in its response to the Government’s consultation on the changes: “It is important we do not place excessive financial burdens on young self-employed members seeking to establish themselves in the profession or indeed talented older members who may be experiencing a downturn in profits.
“This may discourage many from continuing their careers in the entertainment industry and start to drain a talent pool, which is essential for the UK to maintain its world-leading status in the performance arts.”
The Government ran a consultation on how its plans could work from 9 December 2015 to 24 February 2016, although a response – other than the announcement in the Budget – had yet to be issued at the time of writing.
Kate Rutter from Sheffield in Yorkshire (pictured below) has been an actress for the past 39 years.
She loves working in TV, film and theatre and has recently featured in I, Daniel Blake, which won the Palme d’Or at the 2016 Cannes Film Festival.
Having paid voluntary NICs throughout her life she is now able to claim her state pension, which she says has made a “huge difference” to her career. She says the state pension enables her to continue working as an actress and to know she has an income to cover periods when she’s out of work.
But she believes the government’s changes could have a negative impact on a variety of jobs in the acting industry going forward.
“It’s so important people have the ability to pay national insurance contributions and to then benefit from them,” says Kate.
“But the less you earn, the less you will be able to afford voluntary contributions under these changes.
“I think what this will mean for young people is that they won’t be able to come into the business, as they can’t claim out-of-work benefits for the periods in-between jobs.”
She adds that only people who are relatively financially privileged will be able to stay in the industry, and that this will affect the views and opinions given in films, television programmes and theatre productions. “The composition of the business can change the outcome of the product; you need a diverse workforce to create content that is representative of everyone in society.”
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.