UK: Football & image rights (again, at last?)

Huh. Not entirely sure how or why I’ve ignored football image rights tax issues in the past – possibly because it’s been rumbling around for years. And years. Maybe even a decade.

Anyway, the Telegraph is now reporting that HMRC have concluded a number of image rights settlements in relation to footballers and football clubs (but not Rangers – apparently the tax bill that tipped them into administration related to employee benefit trusts rather than image rights).

The use of image rights allow a club to pay an amount to the player for the use of their image (note: not a payment of part of their wages – that would still be employment income and taxable as such. Which is where the disputes all started, of course).  The image is used by the club in promotions, and payments (where structured appropriately) can be made to offshore companies etc – most useful for non-UK domiciled players.  The player’s tax bill depends on where they are domiciled and how the payment is structured, but the main thing is that a payment for image rights is not employment income and so there’s no NICs involved – for the player or the club – and any tax is dealt with under self-assessment and not PAYE, so that there’s a timing/cashflow benefit to the player in particular.

The key point is that the image rights payment has to reflect the value of the player; there’s really little point in claiming that Joe Bloggs in a club in the Vauxhall Opel League division 10 (yes, I know, I know. I know nothing about football. I never claimed to be anything other than a tax lawyer!) is worth £10k a month in image rights when the club pays him £250 a month to play.  The disputes with HMRC have generally been around this point: what is a player’s image worth?

Accordingly to the Telegraph, the Premier League mediated the settlement, establishing a cut-off date before which payments would not be contested, and agreed a banding system for clubs of differing profiles.  The details of the settlement haven’t been generally published, but Chelsea’s accounts last week showed a payment of £6.4million “in relation to an industry-wide investigation into the taxation of payments under image rights”.

For those footballers with an image that’s actually worth something, perhaps they should look to Guernsey: the island is proposing to establish an image rights register to assist with protecting such rights.

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