The Major Sporting Events (Income Tax Exemption) Regulations 2016
Published 21 July 2016
© Crown copyright 2016
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Who is likely to be affected
Non-resident athletes competing in the 2016 London Anniversary Games and/or the 2017 World Athletics Championships.
General description of the measure
The exemption applies to individuals who are not resident in the UK for tax purposes. It also covers taxpayers whose tax residence is ‘split’ between the UK and another country where their income arising from the event arises in the part of the year in which the taxpayer is resident in another country.
The scope of the exemptions is comprehensive and covers prize income directly related to competing in events, income from activity whose main purpose is to support or promote the events, such income arising 2 days either side of opening and closing events, including any promotional activities undertaken by athletes immediately before and after the event.
Policy objective
The government is committed to make the UK an attractive location for internationally mobile major sporting events. In addition, the government remains committed to supporting the legacy of the 2012 London Olympics.
A tax exemption was a condition of the UK’s bid for the 2017 World Athletic Championships.
The 2016 London Anniversary Games are a legacy event from the 2012 London Olympics and Autumn Statement 2015 announced that 2016 would be the final year such an exemption is granted to the London Anniversary Games.
In the absence of this legislation, non-resident participants in the events would be taxable on their events related income in full, and this would make the UK a less competitive location for internationally mobile major sporting events.
Background to the measure
Autumn Statement 2015 announced that the government would exempt non-resident competitors in the 2017 World Athletics Championships and the 2016 London Anniversary Games from Income Tax on their earnings from the events. It also announced that 2016 would be the final year such an exemption would be granted to the London Anniversary Games because this year concludes the quadrennial cycle of events before a new Games is held.
Detailed proposal
Operative date
The Major Sporting Events Regulations came into force on 19 July 2016. Only those whose income would otherwise be liable to tax in 2016 to 2017 will be affected.
Current law
The statutory basis for the taxation of non-UK resident sportspeople and entertainers is provided by section 27 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003 for employment income. For self-employment income by sections 13 and 14 of Income Tax (Trading and Other Income) Act (ITTOIA) 2005. Withholding tax provisions are covered in Income and Corporation Taxes Act (ICTA) 1988 Chapter 111.
The legislation which enables the taxation of visiting non-UK resident sportspeople and entertainers is SI1987/530 The Income Tax (Entertainers and Sportsmen) Regulations 1987. These allow for ‘payers’ of visiting entertainers (such as theatres, music venues and tournament organisers) to be required to deduct tax at basic rate from payments made to visiting non-resident entertainers. This withheld tax is then submitted to HM Revenue and Customs (HMRC) via quarterly returns.
Visiting entertainers and sportspeople are required to pay any further tax due directly to HMRC via the Self-Assessment system. They can also request repayments of tax this way, should too much have been withheld.
Non-UK resident sportspeople performing in the UK are taxed on any income related to their UK performance. This includes prize money, appearance fees and a proportion of endorsement and sponsorship income. This is in line with Article 17 of the Organisation for Economic Co-operation and Development (OECD) Model Tax Treaty, which gives taxing rights for visiting entertainers to the contracting state in which the performance takes place.
For example, if a non-UK resident athlete comes to the UK and competes in a race here, they will be liable to UK tax on the whole of their appearance fee and any prize money they receive from that appearance. They will also be taxable on a slice of their worldwide endorsement income that is related to their UK performance, wherever this is paid to them.
HMRC’s ability to tax this worldwide endorsement income is provided for in statute and regulations. This is based on the number of performance and training days conducted in the UK as a proportion of their worldwide performance and training days.
Proposed revisions
The Major Sporting Events Regulations provide for an exemption from Income Tax for non UK resident individuals competing in certain athletics competitions. This exemption applies to income which these individuals receive for competing in, supporting or promoting those competitions.
Regulation 2 defines ‘Championships Period, ‘Games Period’, ‘duly accredited competitor’, income, ‘London Anniversary Games’ and ‘World Athletics Championships’ for the general purpose of the regulations.
Regulations 3 to 5 provide that non-resident competitors in the London Anniversary Games 2016 do not have to pay Income Tax on their income from competing in, supporting or promoting the event.
This event takes place on 22 to 23 July 2016.
This Income Tax Exemption is available from 2 days before until 2 days after the Games.
Regulations 7 to 10 provide that non-resident competitors in the World Athletics Championships 2017 do not have to pay Income Tax on income which they receive for competing in, supporting or promoting the events.
There are 2 events which make up the Championships.
The first is the Independent Automotive Aftermarket Federation World Championships which takes place from 14 to 23 July 2017. The second is the International Paralympic Committee Athletics World Championships, for parathletes, which take place from 4 to 13 August 2017.
The Income Tax Exemption is available from 2 days before the first event until 2 days after the second event.
Regulations 6 and 10 disapply the ‘withheld tax’ provision mentioned above to income subject to the exemption.
Summary of impacts
Exchequer impact (£m)
| 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|
| Neg | Neg | - | - | - |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
The measure is not expected to have any significant economic impact.
Impact on individuals, households and families
The effect of this exemption is that non-UK resident competitors will not be subject to UK Income Tax on their income arising from their appearance in either the 2016 London Anniversary Games or the 2017 World Athletic Championships. Instead, such individuals will be liable to tax on this income in the countries in which they are resident.
UK resident competitors will not benefit from the exemption.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
The measure benefits non-UK residents, some of whom are likely to belong to non-UK ethnic or national groups. It will also benefit non-UK resident disabled competitors through the para-athletic element of both events. There are not expected to be any disproportionate impacts on protected groups.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses and civil society organisations. It only affects a small number of non-UK resident competitors and may have a very slight effect in easing the burden on a very small number of associated accountants or management companies.
Operational impact (£m) (HMRC or other)
There will be no significant operational impacts for HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please contact David McDowell on Telephone: 03000 585 284 or email: david.mcdowell@hmrc.gsi.gov.uk.
Declaration
The Financial Secretary to the Treasury, David Gauke MP, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.