Taxing images

30 Jan 2019

By: Sport Industry Group

Footballers' image rights are back in the headlines, following news that record numbers of players are being investigated for tax issues by HM Revenue and Customs (HMRC). Image rights have been used extensively by clubs and players as a tool to avoid paying employment tax. But new government guidance requires all businesses to list "image rights" as employee payments in their accounts. 

In this expert column for Sport Industry Group, Leigh Sayliss, Head of Business and Property Taxes at Howard Kennedy, Official Partner of Sport Industry NextGen, helps to shed some light on this complex area of the law.


The ongoing saga of footballers and their image rights doesn't appear to be going away - nor does it look as if it will reach a conclusion in the near future.  

At the heart of the issue is whether fans turn up on match day to watch football being played, or merely to gaze adoringly at their footballing idols. If the players are being paid to play football then their earnings should be subject to income tax and NICs like those of any other employee.  

However, if the players are being paid to allow their names and images to appear on football memorabilia then there are arguments that this is payment for use of the player's image, which can give considerable tax savings.  Any argument needs another side with which to argue and, in this case, the other side are HMRC. The tax payable on image rights can be significantly lower than the tax payable on employment income - especially for international players - and HMRC considers that too much tax is being avoided.  

Over the past few years, HMRC have been investigating large numbers of clubs, players and agents gathering its evidence and HMRC's rhetoric makes it clear that this is not an issue that they will drop.  

HMRC would like to paint a simple picture of well paid and highly privileged sportsmen not paying their "fair share" of tax. However, the issues are complex, especially where international players have built their reputations overseas or where players actively promote their image outside their usual field of play.  

Possibly HMRC's reticence in launching their first assault is that they are trying to find the weakest case, to allow them to set a precedent for all others.  

What is clear is that this is a matter that will not go away and players in all sports will need to look carefully at how they protect, and exploit, their images. Those sports people who have already entered into arrangements, possibly with the encouragement of their clubs, are now at risk of having to unwind their affairs and possibly face significant tax bills that they no longer have the cash to pay.