Autumn Statement 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.’

Following the consultation announced at the Summer Budget 2015, from April 2016 proceeds from sporting testimonials will be liable to income tax. An exemption of up to £50,000 will be available for employed sportspersons with income from sporting testimonials that are not contractual or customary. The legislation will only apply where (a) the event takes place after 5 April 2017 and (b) the testimonial is granted or awarded on or after 25 November 2015. Separate legislation for the National Insurance treatment, which will be introduced before 6 April 2017 will follow the income tax treatment.