HMRC to publish guidelines for employers who make image rights payments

8 March 2017

The Chancellor of the Exchequer presented the 2017 Spring Budget today, and whilst his actual speech was relatively benign, the backup policy documents contained some additional, more interesting comment.

Amongst the brief comments provided was a statement identifying the government’s awareness of UK employers paying image rights payments under separate contractual arrangements to employment income. This practice is most heavily associated with Football, but is also prevalent in other professional sports such as rugby and cricket.

The Budget statement confirms that HMRC are to publish guidelines for such employers who make image rights payments, with the intention of improving the clarity of the existing rules. There is no mention of what we can expect in the guidance, or when we should expect it. However, it is likely that any guidance from HMRC will incorporate the current practices developed by HMRC with leading premier league football clubs, such that image rights payments should be linked (and restricted to) to both the commercial revenues of the club and the commercial value of the employee.

Jon Elphick is a Director of Mark Davies & Associates and an international tax advisor. He provides tax advice to private individuals on complex international structures, and has advised a number of UK resident foreign athletes on their UK tax affairs, with a specific focus on structuring their image rights arrangements in a tax efficient manner.

Jon comments:

“Although it is unlikely that any guidance provided by HMRC will be ground breaking, it is certainly a welcome step from the government towards introducing a consistent and known approach towards taxing image rights arrangements. It will certainly help in enabling athletes and sports clubs alike to plan their image right arrangements with a bit more certainty and comfort”.

At this stage, it does not appear that such guidance would affect athletes operating on a self-employed basis.

Thursday, 09 March 2017