Chancellor in tune with the orchestras

Chancellor Gordon Brown has come to the rescue of orchestras who could have faced demands for £33 million in unpaid national insurance.

A report in The Guardian claims that after an investigation into the tax liabilities of orchestras employing freelance musicians, HM Revenue & Customs (HMRC) advised the Chancellor that the orchestras do not have to pay the contributions, thereby averting not only the back tax bill of £33 million but an annual future bill of £6 million.

Many orchestras are formed of self-employed musicians and have not paid national insurance on the income paid to them, as they would have had to for permanent staff.

In 1998 the Inland Revenue changed the regulations to benefit actors. Their employers would have to account for national insurance when paying them a salary and issue P45s at the end of their contracts, thereby allowing them to claim jobseekers' allowance between jobs. Last year the tax office launched an investigation into whether orchestras should pay national insurance on their payments to musicians.

The tax office advised Ministers that the payments should be considered as 'fee' income rather than 'salary' income and therefore not liable to national insurance. A Revenue source told the Guardian: "This is a good example where by working with us and helping us get the information we needed, the orchestras have got the right result."

Orchestras, including the London Symphony Orchestra and the Halle Orchestra welcomed the decision.

Full article: Orchestras upbeat as Brown lifts £33m burden - Guardian, June 2006.