Chancellor Rachel Reeves is facing accusations of unfairly targeting the football industry after announcing plans to clamp down on image rights earnings in her recent Budget.
What the Budget Crackdown Means
The government revealed it will introduce legislation from 2027 to ensure all image rights payments connected to employment are treated as taxable employment income. This move directly impacts top footballers who currently benefit from setting up image rights companies, which are taxed at a lower corporation tax rate compared to income tax on salaries.
Tax expert Pete Hackleton from accountancy firm Saffery commented: "While the government didn't mention football in the Budget, with it signalling a crackdown on image rights we probably know where the crosshairs are pointed."
Expert Reaction and Industry Impact
Hackleton expressed astonishment at the level of focus on football, stating: "The level of focus from tax administrations on a group of essentially 500 well paid young men is incredible, given the huge wealth across other much larger sectors of the economy."
He emphasised the Premier League's significant economic contributions, noting it "contribut[es] huge amounts to the Exchequer in terms of tax on salaries, VAT on ticket sales and broadcast income." Hackleton suggested the potential revenue from this measure might be relatively low and could prove to be "more rhetoric than real revenue raiser."
The scrutiny isn't new. HMRC challenged the validity of image rights companies 25 years ago in a landmark case involving Arsenal players Dennis Bergkamp and David Platt, arguing they were a "smokescreen." The players successfully contended their companies provided services beyond contractual obligations.
Future Implications and Legal Scrutiny
Current Arsenal and England star Bukayo Saka's image rights company reportedly generated £4.6 million in revenue last year, illustrating the substantial sums involved.
Tom Wilson, head of sport at HaysMac, warned that any changes are "likely to have an impact on remuneration structures particularly at the top of the various team sports."
Sport lawyer Andrew Nixon of Sheridans said he was keen to "see the detail behind the planned for legislation as it could have a significant impact." He noted that the wording leaves "some room for manoeuvre," suggesting potential flexibility in how the rules are applied.
This represents the latest effort by successive governments to increase tax revenue from football, focusing on the relatively small number of high-profile players who generate massive public interest in the sport.
