Draft HMRC guidance shows when image rights deals will be taxed like wages from April 2028
Draft guidance published on Friday sets out which sponsorship and image rights payments to employees, mostly in professional sport, will count as employment income. Deals a player strikes alone with a brand will often stay outside the rule.
Image rights money that an employer pays to a member of staff, or helps them get from a sponsor, will be taxed in the same way as salary from 6 April 2028. Draft HMRC guidance published on Friday uses a dozen worked examples to show where the boundary will sit, and in most of them the deciding question is how closely the employer was involved.
The rule was announced at Budget 2025 to start in April 2027, then put back by a year to give employers and employees more time to adjust. It will be legislated in the Finance Bill 2026 to 2027 as a new section 226F of the Income Tax (Earnings and Pensions) Act 2003. Payments caught by it will attract Income Tax and Class 1 National Insurance, and employers will have to put them through PAYE alongside normal pay.
HMRC expects the measure to mainly affect professional sport, and within that a minority of employers in professional football. Image rights are not defined in UK law, and HMRC says the absence of any reference to them in current legislation has left uncertainty over when such payments are linked to a job. The policy paper puts the extra revenue at £45 million a year by 2029 to 2030.
Three ways a payment is caught
A payment falls under the new section if it is made by the employer or a person or company connected with it, if a third party pays it but the employer arranged or facilitated the deal, or if it is otherwise paid "by reason of the employment". On that last test, the job has to be an operative cause of the payment, though not necessarily the only or main one. A merely incidental link is not enough.
The simplest cases are employer payments. A club that agrees to pay a new signing the equivalent of £80,000 a year in salary and £20,000 a year for image rights will see both amounts taxed as earnings, whether the image rights sit in the employment contract or in a separate agreement. The same applies where a radio station sets up a subsidiary to pay a new presenter £20,000 a year for promotional work.
Where the club's role decides it
Several examples turn on what the employer does when a brand comes calling. A club that simply hands over a player's contact details, takes no fee and stays out of the talks has not arranged the deal. If it sets up the meeting and sends someone to negotiate for the player, or only passes on the details once the brand agrees to pay it an introducer fee, the player's fee is caught.
Redirected sponsorship counts too. In one example a club renewing its star player's contract agrees that sponsors will pay the club £20,000 less each year and give that sum to the player for extra promotional work. Because the club arranged it, the money is treated as earnings. A club that picks which players appear in a sportswear brand's photoshoot, with the brand paying both the club and the players, is in the same position.
Getting the employer's permission, which many contracts require, does not on its own mean the employer arranged anything.
Boot deals and personal fame
HMRC accepts that a boot deal a player negotiates directly with a sportswear brand, which applies whichever club they play for, is outside the rule. The answer changes if the club introduces a newly signed professional to its own kit sponsor and the brand offers the same terms it gives the club's other new players.
For deals with no employer involvement at all, the guidance looks at whether the campaign trades on the job. In one example, a club wins its national league for the first time and its captain is soon signed up by a national food manufacturer based in the same city, for a "Biscuits for Winners" campaign in the club's red and green. The shared location and branding, the nod to the title win and the colour scheme lead HMRC to treat that fee as earnings. A brand that picks a player for a long record of top-level success, in adverts that never refer to the club, would not be caught, even though the player's current club has just won the league.
The guidance also notes that some arrangements could fall under the separate rules on employment income provided through third parties, and that an adjustment prevents the same amount being taxed twice.
HMRC says the draft may change before it goes into its Employment Income Manual when the law takes effect. Questions can be sent to employmentincomepolicy@hmrc.gov.uk.
