Draft legislation for sporting testimonial payments
06 December 2016
Draft legislation has been published which explains simplifying the Income Tax and National Insurance treatment of payments derived from sport.
As part of the 2015 Autumn Statement, the government announced that it would be simplifying the Income Tax and National Insurance treatment of payments derived from sporting testimonials.
Geographical extent – The changes extend to all four nations of the UK. The draft legislation details the legislative amendments required for Great Britain and these are mirrored for Northern Ireland.
The changes are summarised as follows:
Bringing payments from sporting testimonials that are; non-contractual, non-customary and organised by an independent testimonial committee, within the scope of both income tax and National Insurance contributions (NICs).
Introducing a new exemption for tax and NICs of £100,000 for sporting testimonial payments that are organised by an independent testimonial committee.
Ensuring the new £100,000 exemption applies to only one testimonial in a person’s lifetime, which could come from one event or a series of events held over a 12 calendar month testimonial year.
The changes for income tax were legislated for in the Finance Act 2016, and will come into effect on 5 April 2017. The corresponding changes for NICs will be included in the National Insurance Contributions Bill 2017, and will come into effect a year later: in April 2018.