Image Rights Tax Changes from April 2027: What Athletes and Clubs Need to Know
The Autumn Budget delivered many headline announcements, yet one of the most significant changes for the sports industry was tucked away in the tax administration and compliance reforms.
As a firm that advises professional athletes, football clubs and individuals across the wider sports and entertainment sector, Nordens has been reviewing these developments closely.
From April 2027, HMRC will introduce new rules that change how image rights payments are taxed, affecting professional athletes, clubs and their advisers.
Image rights refer to the legal rights an individual has over their name, likeness and personal brand. Historically, these payments have been made to image rights companies, allowing athletes to structure this income separately. HMRC has challenged this structure for many years, and the new reforms move to formalise this position.
What is changing from April 2027
From 6 April 2027, all image rights payments that have a link to employment will be subject to PAYE and NICs. This places the payments firmly within the employment tax system rather than being taxed at corporate rates.
For athletes, this creates an effective tax rate of around 47% on employment-related image rights. For clubs, employer NICs of roughly 15% will also apply.
What does this mean in practice?
Are image rights companies coming to an end? If HMRC can demonstrate that a payment is linked to employment, it must be taxed under PAYE. This raises serious questions about the continued use of image rights companies for club-related payments.
Are sponsorship deals affected? Commercial contracts entirely separate from the club employment contract should remain unchanged. However, any agreement tied to performance may need amending.
What will players and clubs need to do? This change is likely to drive a wave of contract renegotiations. There is also the real risk of talent moving overseas where rules may be less restrictive.
Our view at Nordens
These reforms will reshape how clubs and athletes structure their affairs. At Nordens, our tax team can help you:
- Review current contract structures
- Assess exposure to PAYE and NICs under the new rules
- Plan future commercial arrangements
- Protect long-term income and image rights value
If you would like tailored advice ahead of the 2027 changes, contact our team today.