For many years, UK sport has operated an uneasy but workable compromise on ‘image rights’: clubs could contract for a player’s commercial likeness through a separate image rights company, and HMRC while scrutinising the practice, accepted genuine arrangements.
From April 2027, the landscape changes significantly. Under proposals announced in the 2025 Budget and expected to be legislated in Finance Bill 2026–27, any image rights payment that is ‘related to an employment’ will be treated as employment income, subject to PAYE and Class 1 NICs for both player and club. In effect, once the payment connects to the employment, it must go through payroll regardless of whether it is paid to a company.
This represents a major shift from the current ‘dual contract’ model often used in professional sport, particularly football.
Background: HMRC’s current position
HMRC has consistently said the UK has no freestanding legal image right; instead, the term reflects a bundle of contractual and IP related interests (e.g. trademarks, goodwill, commercial likeness). Under current practice, clubs frequently enter:
- a playing contract (employment), and
- a separate image rights agreement (often with a player owned company).
HMRC historically accepted this model where the commercial arrangements were genuine and could be evidenced.
What changes from April 2027
The new rules deem any employment related image rights payments to be earnings, triggering:
- PAYE
- employee NICs
- employer NICs (currently 15%).
This dramatically increases the cost for both parties. For top athletes, the highest marginal UK rate (income tax + NIC) is up to 47%, compared with corporation tax of up to 25% (and if no remuneration is taken out, no personal tax liability arises) under the old model. Clubs will also face materially higher wage bill costs.
With Real Time Information (RTI) rules, PAYE must be paid shortly after remuneration is made, accelerating cash flow pressure.
These changes place real strain on traditional ‘dual contract’ arrangements and will inevitably influence negotiations ahead of the 2027/28 season.
What may still fall outside PAYE
The image rights company is not dead. Certain categories can still sit outside the employment tax net if they are genuinely independent of the club role and can be properly evidenced. This includes:
- independent third party endorsements
- boot deals or sponsorships negotiated entirely outside the club package
- personal brands or ventures operated separately from the club
- overseas image exploitation with real substance outside the UK employment context.
However, HMRC will undoubtedly test anything that appears ‘dual purpose’ particularly where sponsors overlap with the club or activation relies heavily on club assets.
Will this kill the image rights company?
No, but its use becomes more specialised. Corporate structures will remain viable for:
- personal commercial ventures
- media activities
- consumer product lines
- truly independent endorsements.
But club‑linked image rights fees, no matter how separately documented, are highly likely to be treated as employment income from April 2027.
Immediate actions to consider for affected players, clubs and agents to prepare for the new rules.
- Review all existing image rights streams
Identify which income lines will be caught and model the net of tax outcome before and after April 2027. - Strengthen evidence for non employment income
For genuinely independent deals, ensure contracts, activation plans and commercial substance clearly support the position if HMRC reviews it. - Factor the changes into upcoming negotiations
Given the additional tax and NIC cost, agents and clubs will need to revisit salary/fee structures, especially with the summer transfer window approaching. - Seek bespoke advice
These rules involve nuance and substantial tax exposure. Early, tailored planning can prevent costly surprises.
Final thoughts
Although overshadowed by headline Budget measures, the April 2027 image rights reforms represent the most significant shift in the area for more than a decade. Those who begin planning now will be best placed to renegotiate appropriately, restructure sensibly, and avoid unwelcome HMRC scrutiny.
For more information or to discuss your personal circumstances, please contact below, or your usual Crowe advisor.
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