Summer Budget 2015: Tax treatment of income from sporting testimonials

A testimonial match is a practice in certain sports, particularly football, where a club has a match to honour a player for their service to their club. The players usually receive payments from independent committees to play at these matches.

At present the tax treatment of such payments is governed by HMRC guidance which broadly states that, where the right to a testimonial match forms part of the sportsperson’s contract of employment, the payment is subject to income tax and NIC. Where there is no such entitlement and no custom exists, the payments are not regarded as earnings but are gifts to demonstrate ‘affection and regard for the personal qualities of the player.’

The government has published a consultation to review the existing rules. It is their opinion that existing guidance has departed from the current statutory position and proceeds from sporting testimonials should be taxable as earnings and so subject to income tax and, possibly, NIC.

Responses are invited and the consultation will close on 2 September 2015.