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Chancellor shows yellow card to footballers’ image rights

9th Mar 2017
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Referee showing yellow card at sunset

The Chancellor announced in his Budget speech that HMRC will publish guidelines for employers who make payments of image rights to their employers under separate contracts.  

The taxation of image rights, in particular the image rights of footballers, were a focus of a Public Accounts Committee hearing in December 2016, after it emerged that non-domicile footballers playing for UK clubs were able to receive payments for image rights without paying any UK tax via a legal loophole.

In December several newspaper reports alleged that HMRC had established a team to investigate the image rights of stars after an explosion in footballers using private companies and other legal schemes to cut millions from their tax bills – something that HMRC publicly denies.

Details on the potential guidelines announced in the Budget are relatively scarce, with specifics limited to a short paragraph in the Budget red book that reads: “The government is aware that some employers pay image rights in respect of employees under separate contractual arrangements to employment income. HMRC will publish guidelines for employers who make payments of image rights to their employees to improve the clarity of the existing rules.”

HMRC chief: Schemes ‘biggest problem in football’

According to a Sunday Times report more than 180 Premier League players, including the majority of the current England team, have such arrangements totting up more than £60m in their companies, although there is no suggestion that the players are involved in any illegal activity.

Giving evidence to the commons Public Accounts Committee (PAC), HMRC chief executive Jon Thompson labelled the schemes the ‘biggest problem in football’, but claimed the Revenue was powerless to stop it after losing a tax tribunal case in 2000 [Sports Club v HMIT], involving Arsenal FC, David Platt and Dennis Bergkamp (which is to date the only case taken by HMRC to tribunal in relation to image rights structures).

However, a Daily Mail investigation in September 2016 alleged that the Revenue had struck deals with a number of players and clubs, under which clubs can pay up to a fifth of their footballers’ total pay packages to ‘image rights’ companies rather than as part of their wages.

Under the agreement for the 2014/15 season the player can avoid paying top rate income tax on the money, and clubs can cut the amount of National Insurance contributions they pay.

Thompson went on to stress to the PAC that the schemes were legal, and were also common among highly paid actors.

Substantial legislation change needed

Commenting on the taxation of image rights Chris Sanger, head of tax policy, EY said: “The taxation of such rights is currently based on tax case law, so it is hard to see how the tax treatment can be substantially changed without legislation. 

“But for footballers currently benefitting from the favourable treatment of image rights it looks like they may be in the last few minutes of the match and any added time is unlikely.”

Gabelle partner Kevin Offer does not expect them to disappear, as they are too well established in case law.

“It will certainly be a tightening on their use”, said Offer, “which similar to some of the non-dom proposals like the remittance basis charge will possibly make it unattractive or uncommercial for most players”.

According Offer, the guidelines could represent the formalising of what has already been agreed with a lot of the clubs in terms of the acceptable percentage of income attributable to image rights.

“But you can’t guarantee until you see them”, concluded Offer, “and there’s always an opportunity that they may shift the goalposts.”

What is an image right?


The law in relation to image rights has become exceptionally complex as public interest in the lives of celebrities and sports stars has risen, as have the methods by which their images can be shared (and money made from them).

An image right can refer to anything which could identify a particular person to the general public. This may include:

  • Image or ‘likeness’
  • Personality
  • Name, nickname or catchphrase
  • Physical nature or mannerism

Effectively managing the image and personal brand of a global star can play a crucial role in the commercial side of being in the public eye, particularly where sponsorships, endorsements and other commercial agreements are involved.

AccountingWEB's Spring Budget coverage is brought to you in association with TaxCalc. Visit our Budget page to keep up with all the predictions, debates and post-Budget analysis.


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