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Image Rights for Sportspeople

Pete Fairchild, Partner, Private Clients
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The concept of image rights has been around for many years and continues to attract interest from HMRC. We explain what image rights are, the possible tax benefits that can result from a robust structure and issues to be aware of before getting involved in them.

What are they?

It's a term that most people will have heard of but if you pointed the finger at someone and said “explain to me what image rights are” most would struggle to define them. The concept of an image right is not one recognised under English law. It is, however, recognised in other jurisdictions, France, Germany and the US. Indeed, the Guernsey authorities produced a register where high-profile individuals living or dead (via their executors) can come forward to register their image rights as an asset.

Image rights concern the various rights an individual owns, for example their name, nickname, photograph, likeness, signature, logo and personal brand. We've all got image rights in varying degrees with different levels of commercial appeal.

‘Sports Club’ case

This is a prominent case involving two players signed by Arsenal Football Club. The club employed the players as per usual and paid them a weekly wage for their playing and training duties. The club also made extra payments for the exploitation of the players’ image rights and HMRC took the case claiming the club had not accounted for the normal payroll deductions on those payments over and above the salary. The club successfully argued that the image rights payments were separate to those under the employment contract and so did not have to be subjected to payroll deductions.

Tax benefit

Payments made by football clubs for exploiting a player’s image rights are typically made to a limited company that the player controls. If the player received the payments directly, given the amount of football wages, personal income tax at 45% would be due, as well as 2% National Insurance. Tax due on the company’s profits will be at corporate rates (i.e. 19% until 31 March 2023 and probably 25% with marginal relief afterwards). The tax savings are, therefore, significant.

The player’s company can enter into separate image rights arrangements with other third parties interested in promoting their brand or service with the player. Typically, this will include a football boot deal.

Points to be aware of

Clubs and players entering into image rights arrangements need to demonstrate that the image rights payments are completely separate from the employment contracts. The club will need to keep detailed records showing how it has used the player’s image rights to generate additional revenue. Above all, the arrangements will need to be commercially justifiable.

A quite recent case involved Hull City where the club sadly could not produce any evidence of the exploitation of their marquee player’s image rights, for which the club was paying a sizeable fee. HMRC successfully challenged those arrangements arguing there was no commercial justification and therefore, all that existed was an employer employee situation, meaning that all payments made by the club should have had PAYE deductions applied.

The player will need to be fully briefed and understand that they will need to perform additional duties over and above those stipulated in the employment contract for an image rights arrangement to work. Examples include meeting and greeting existing and potential new club sponsors, additional photographs, media exposure and speaking engagements.

For more information speak to your usual Crowe contact or Pete Fairchild.


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Peter Fairchild
Pete Fairchild
Partner, Private Clients