Image rights have become an increasingly valuable part of the commercial landscape in professional sport. As athletes build brands that extend well beyond the pitch, court or track, the lines between employment and wider commercial opportunities can become increasingly important from a tax perspective.
Against that backdrop, the Autumn Budget 2026 has given the sector more time to prepare for forthcoming changes to the taxation of image rights. The rules, which will see payments related to employment taxed in the same way as wages, were due to take effect from April 2027 but will now come into force on 6 April 2028.
While the delay will be welcome, it does not change the direction of travel. For athletes, clubs and their advisors, the focus should now be on understanding how the new rules will apply, which arrangements could be affected, and whether contracts need to be reconsidered or amended.
How will the new rules work?
Although HMRC has yet to release any draft legislation, we can infer from the information available how the rules are likely to be implemented.
Image rights payments related to an individual’s employment will be treated as employment income, subject to Income Tax and National Insurance contributions in the same way as other employment income or wages, with PAYE operated. This means the employer will be required to make employer’s National Insurance contributions and the cost to clubs of these payments will increase.
Crucially, the rules can apply whether the payment is made directly to the employee or through a third party, such as an image rights company. The presence of a separate company will not, in itself, take an employment-related payment outside the scope of the rules. This may cause difficulties for an athlete’s image rights company where payments need to be processed through PAYE before being received by the company.
That does not mean, however, that all income generated from an athlete’s image or personal brand will become employment income. Commercial arrangements outside their employment relationship will not be impacted by this change.
When does the distinction matter?
Athletes may have valuable commercial relationships with sponsors and brands that exist entirely independently of their employment. An entirely separate arrangement with a third party will be unaffected by this particular measure.
By contrast, payments made by an employer in respect of promotional services, alongside an athlete’s employment, will now be treated as employment income.
There should therefore be a clear commercial rationale for distinguishing payments that are linked to employment from those that are genuinely independent of it.
Case study: How could the new rules work in practice?
Consider a professional footballer whose personal brand generates commercial income alongside their playing salary.
Employment-related image rights
The player’s club pays £500,000 a year to their image rights company for the use of their name and image in club marketing, sponsor activity and other promotional work. Although the payment is made under a separate agreement and to a separate company, it is connected to the player’s employment.
Under the new rules, the £500,000 would therefore be treated as employment income, subject to Income Tax and National Insurance through PAYE. The club would also be liable for employer’s National Insurance contributions.
Independent commercial arrangement
Separately, the player has a £750,000 personal endorsement agreement with a sportswear brand paid to their image rights company. The deal has been negotiated independently of the club and relates to the commercial exploitation of the player’s personal brand, rather than their employment. The club itself is not formally linked with the sportswear brand, and not something all other players at the club are linked with.
Provided the arrangement is genuinely separate from the employment relationship, it would not be affected by this particular measure, and no adjustments would be required. HMRC has confirmed that an entirely separate arrangement with a third party will remain outside its scope.
The key distinction is the connection to employment. Using a separate image rights company will not, by itself, take an employment-related payment outside the new rules, while genuinely independent commercial arrangements can remain separate.
What should clubs and athletes review now?
Preparing for April 2028 does not necessarily mean changing existing arrangements. In fact, it may be preferable not to implement any changes before April 2028, but instead to have a plan in place and assess how existing arrangements will be affected by the new rules.
Areas to review include:
- What rights are being acquired and how they are being commercially exploited
- Whether payments relate to the athlete’s employment or form part of an entirely separate commercial arrangement
- Whether contracts accurately reflect how those arrangements operate in practice
- Whether there is appropriate commercial evidence supporting the arrangements and the payments being made
Although the plan for image rights to be included in employment income has been delayed, the change has not been abandoned. We will have to await HMRC’s draft legislation to fully understand how the change will be implemented. Clubs, athletes and their advisors now have a longer window to address any issues ahead of implementation.
Preparing for what comes next
Image rights will continue to be an important part of the commercial landscape in professional sport, particularly as athletes build increasingly valuable brands alongside their sporting careers.
The forthcoming changes do not bring every image rights, endorsement or sponsorship arrangement within employment taxes. But where payments are connected to employment, clubs and athletes will need to understand how the new treatment applies.
For those potentially affected, now is the time to review existing arrangements.
With the changes now taking effect from April 2028, there is time to act before they become an immediate compliance issue. HaysMac help athletes, clubs and sports organisations review existing image rights arrangements, understand where the new rules could apply and identify any action needed ahead of implementation. Speak to a member of our Sports team to discuss what the changes mean for you.
