Do child actors pay taxes?

Do child actors pay taxes? bchellingworth April 30, 2019

Working with children and animals

The old adage says that actors should never work with children or animals. I disagree – how else would we get the Home Alone movies and Babe? Not to mention Babe 2, Pig In The City. I have a family friend whose son, Adam, has recently been going into auditions for commercials and small parts in films. He rang me the other day, and we got chatting about a recent audition and how well it went for Adam.

There are a number of rules around how child actors can work. Recently, the Mary Poppins Returns film employed children, and there are strict guidelines as the hours they can be on set. Production companies even have to employ teachers to ensure that the child actors don’t miss out on valuable education. But as a parent of an actor, what is your job? Especially when it comes to taxes? I did some research and talked to my accountant, Keith, to help out my friend and his son.

Taxes for child actors are very similar – with a few crucial differences

Luckily, most taxes situations are exactly the same for adults as they are for children. The 2019-20 threshold is £12,500 – children, much like adults, can earn up to this without being taxed. Any money that a child earns over this is taxed according to whatever tax band the earnings fall into. However, there is one major difference. Unlike adults, children do not have to pay National Insurance. Remember to check that whoever processes payments for the production company understands this.

Track your child’s acting expenses

All actors should keep track of expenses for tax purposes. Actors can deduct clothing and other work specific purchases, such as agent fees, subscriptions to industry magazines, research articles like books and films, and even food and drink associated with work. Make sure you are keeping track of any of these expenses – they can really add up to a huge tax break at the end of the financial year.

Of course, knowing what exactly to deduct is half of the battle, and is one of the reasons that we advise all working actors (child OR adult) to hire an accountant that understands the entertainment industry. Contact The Showbiz Accountant for a free 15-minute review of your situation.

Making the most of your child’s future

It is unlikely that your child will make shrewd investments for the future – unless you have a very smart kid. I know at that age, I was focused on saving pocket money to buy Lego, rather than thinking about putting away some earnings for a deposit on a mortgage, or to help me out through University. You may have to make some decisions for them.

You can spend some of the money on their future if you have access to their funds, but it is important to note that legally, the money belongs to your child. This means everything you spend from the account must be in the child’s interest. You really need to make sure you are investing or saving in a responsible way, making sure that the security of the money is the highest priority. That means boring things like savings accounts and low yield mutual funds, rather than exciting high-risk ventures like financing oil drilling and investing in start-ups.

This area can be a real minefield for parents of child actors. Obviously, you don’t want the money to lose value over time because of interest – but make sure that you fully understand the risks of investing money. If you are in any doubt, consult somebody who knows how accounting for child actors works – contact The Showbiz Accountant.