Employee or contractor? Lorraine Kelly’s tax win against HMRC

TV presenter Lorraine Kelly hit the headlines recently after winning a row with HMRC over a £1.2m tax bill.

In 2016, Lorraine received a national insurance and income tax bill from HMRC.  The tax office claimed that she was an ITV employee, but Lorraine argued that she was a freelancer.

Lorraine had signed a contract in 2012 to present her popular breakfast show. This contract was through a company she runs with her husband. Then, in 2016, she received an income tax bill for almost £900,000, and a demand for more than £300,000 in national insurance contributions.

The TV star appealed against HMRC at a tribunal.

The judge’s ruling

The judge ruled in Lorraine’s favour that she was a “self-employed star” and not employed by ITV. The relationship that she had with ITV “was a contract for services” and not that of employer and employee. Lorraine did not receive typical staff benefits such as holiday or sick pay, and she was allowed to carry out other work.

Furthermore, the judge classed Lorraine as a “theatrical artist” who presents a “persona of herself” as the Lorraine Kelly brand, and it is the brand that ITV purchases. This means that payments to her agent can be allowed as a tax-deductible expense.

This was reinforced by the judge declaring that “For the time Ms Kelly is contracted to perform live on air she is public ‘Lorraine Kelly’. She may not like the guest she interviews, she may not like the food she eats, she may not like the film she viewed, but that is where the performance lies.”

Employed or contractor?

Someone’s employment status – meaning whether they are classed as an employee or self-employed – determines how much tax they pay.  That’s why we work closely with contractors and freelance staff to ensure they are treated correctly by the tax office. We provide a range of services and support for contractors. Click here to find out more.

On a separate note, Lorraine, our Queen of Morning TV, has an OBE for services to charity. If you’re also feeling charitable today, please take a look at our JustGiving page, where we’re working towards a target of raising £10,000 for Great Ormond Street Children’s Hospital.