Professional athletes earn in more ways than almost any other taxpayer: wages, bonuses, endorsement deals, image rights, appearance fees, prize money — often across several countries in a single season. HMRC has dedicated units watching this sector, and the case law is rich. This guide covers the three areas that generate the most disputes: image rights structures, agent fees, and UK tax on visiting overseas athletes.
Image Rights: Legitimate Structure or Disguised Salary?
The classic arrangement: a club pays the player a salary for playing, and separately pays a company owned by the player for the right to exploit his or her image — name, likeness, reputation. Done genuinely, the image rights company pays corporation tax rather than the player suffering income tax and NIC at top rates.
The structure was first accepted in Sports Club plc v Inspector of Taxes [2000] (the anonymised Arsenal case), where the Special Commissioners held that payments for genuinely commercial image rights agreements were not emoluments of the player's employment.
But the boundary was drawn hard in Hull City AFC (Tigers) Ltd v HMRC [2019] UKFTT 227. Hull City paid around £440,000 a year to the offshore image rights company of midfielder Geovanni. The tribunal found there was no real commercial value in exploiting Geovanni's image for a club of Hull's profile, no evidence the club ever intended to exploit it, and that the payments were in substance disguised earnings — taxable as employment income, costing the club millions in PAYE and NIC. The lesson: an image rights deal must reflect genuine commercial value, actually exploited, properly priced — a percentage plucked from a player's salary will not survive scrutiny.
Agent Fees and Dual Representation
In most transfers and contract negotiations, one agent acts for both player and club — "dual representation". The tax consequences are routinely mishandled:
- Where the club pays the agent's fee on the player's behalf, that payment is a taxable benefit for the player — PAYE and NIC are due on it
- Only the part of the fee genuinely attributable to services for the club escapes the player's tax — and HMRC has made clear it will challenge default 50/50 splits that don't reflect the work actually done. Evidence of who the agent really acted for, and when, is essential
- For the player, the personal share of an agent's fee is generally not deductible against employment income (the "wholly, exclusively and necessarily" test for employees is far stricter than for the self-employed)
Clubs that paper a deal as mostly "club services" to suppress the player's benefit-in-kind are taking on a PAYE settlement risk that lands years later, with interest and penalties.
Overseas Athletes Competing in the UK: The Agassi Principle
Non-resident sportspeople pay UK tax on their UK performance income — including a proportion of worldwide endorsement income connected to UK appearances. The reach of this rule was confirmed by the House of Lords in Agassi v Robinson (Inspector of Taxes) [2006] UKHL 23: Andre Agassi, non-resident, had endorsement income paid by Nike and Head to his own offshore company — with no payment ever touching the UK. The Lords held UK tax applied anyway: the legislation catches payments connected with a UK performance regardless of where, or to whom, they are paid. Routing money offshore does not work.
Payers in the UK must withhold basic-rate tax from payments to non-resident sportspeople under the foreign entertainers rules — see HMRC's guidance on paying tax in the UK as a foreign entertainer or sportsperson. Visiting athletes can often agree a reduced withholding with HMRC's Foreign Entertainers Unit based on expected actual liability, and a double tax treaty usually gives credit in the home country. (This rule is the reason some global stars have historically limited their UK appearances — the UK taxes a slice of worldwide endorsements based on UK competition days.)
The Wider Checklist for UK-Based Athletes
- Multiple income types, multiple treatments — employment (club wages, PAYE), self-employment (appearance fees, some endorsements — Self Assessment), company income (genuine image rights)
- Short careers — pension funding and benefits like testimonials need planning early; testimonial payments above the £100,000 exemption are taxable
- International moves — residence, split years and treaty positions around a transfer window can change a year's tax bill dramatically
- HMRC attention — football in particular has standing compliance projects on image rights and agent fees; expect questions, and keep contemporaneous evidence
Specialist Advice Pays for Itself
SMD Accountancy advises athletes, agents and clubs on employment income, image rights arrangements that hold up, agent fee structuring and Self Assessment for sporting income. If any of your income comes from your name as well as your performance, book a free 20-minute call before HMRC books one for you.