Treatment of income from sporting testimonials

09 August 2016

In response to consultation on the draft legislation for the treatment of income from sporting testimonials, the proposed exemption of £50,000 has been increased to £100,000

Geographical extent - This regulatory change applies to all four nations of the UK.

As previously announced, legislation will be introduced in Finance Bill 2016 to confirm that income from sporting testimonials and benefit matches for employed sportspersons, irrespective of whether they are arranged by the sportsperson’s club or by an independent testimonial committee, is chargeable to income tax under PAYE.

Legislation is introduced in Finance Bill 2016 to amend Income Tax (Earnings and Pensions) Act 2003 (ITEPA) to clarify the law in this area and confirm that income arising from a non-contractual or non-customary sporting testimonial or benefit for an employed sportsperson is liable to income tax. Legislation will also be introduced before April 2017 to deal with certain consequential amendments for income tax and to set out the National Insurance contributions (NICs) position.

The changes to ITEPA will also include the introduction from 6 April 2017 of a one-off exemption of £100,000 from Income Tax, and corresponding legislation will be introduced for NICs. This will apply to income from a non-contractual or non-customary testimonial being paid to or on behalf of an employed sportsperson. The exemption will apply to income arising from relevant events held in a maximum period of 12 calendar months only, beginning with the date the first event is held in a ‘testimonial year’, even if that year straddles more than one tax year.

If the level of the income arising from the testimonial or testimonial year falls below the value of the exemption, the amount of the unused exemption will not be available to carry forward to a future sporting testimonial or benefit match for the sportsperson, or against any other testimonial events held after the end of that 12 month period.

Any non-contractual or non-customary testimonial events held on or after 6 April 2017 from a testimonial that is awarded or arranged for a sportsperson prior to 25 November 2015 will fall within existing arrangements.

For further details, go to GOV.UK.