Sporting testimonials: Income Tax and National Insurance payments

Find out how much Income Tax and National Insurance contributions to pay on sporting testimonial income.

Sporting testimonial tax changes

From 6 April 2017, new rules apply to the treatment of sporting testimonial income.

Income Tax is due on income from all sporting testimonial and benefit match events. Corporation Tax and VAT may also be due depending on the nature of the income or how payments are made.

The government has agreed to a ‘one-off’ tax exempt amount of £100,000 for income from a non-contractual or non-customary sporting testimonial event (or year), if certain conditions are met.

The new rules cover income from events that take place on or after 6 April 2017, but only where the testimonial has been announced on or after 25 November 2015.

The new rules don’t apply to National Insurance contributions (NICs). Matching changes for NICs will apply from 6 April 2019.

This means existing arrangements for the payment of NICs will apply until 5 April 2019.

Who the changes affect

These changes will apply to:

  • sportspersons
  • independent testimonial committees


Contractual and customary

In many cases, sportspersons have a contractual agreement with their employer for sporting testimonials. Often the agreement will be that if the sportsperson stays with the team or club for a specific number or years, they will be entitled to a testimonial, although it can also cover other matters.

If it’s normal practice for a sportsperson to be awarded a testimonial in certain circumstances, this is what we refer to as ‘customary’. It doesn’t matter whether the testimonial is organised by the employer or by a third party.

For contractual and customary, all such income is treated as earnings from the employment, meaning the:

  • employee should pay Income Tax and Class 1 NICs
  • employer or testimonial committee has to pay employer NICs

Read about employee and employer Income Tax rates and National Insurance contribution rates.

Non-contractual and non-customary

A non-contractual testimonial will be where there isn’t a contractual arrangement between the employer and the sportsperson.

A non-customary testimonial will be where there isn’t a contractual arrangement or a testimonial award which is considered to be normal practice.

These definitions remain the same as previously determined through case law and have not been altered by the new legislation.

How the ‘one-off’ exemption works

A ‘one-off’ exemption of £100,000 is available from 6 April 2017 to ensure that sportspersons on modest incomes (who are nearing end of career or have reached the end) are protected from the change.

A sportsperson will qualify for a ‘one-off’ tax exemption of £100,000 on the income received if:

  • they’re an employed sportsperson
  • they’re a previously employed sportsperson and the testimonial relates to that employment
  • the testimonial or benefit match is non-contractual or non-customary
  • the events are held during a single testimonial or testimonial year
  • the events are organised or controlled by an independent person (normally a testimonial committee)
  • there has been no previous testimonial income to which the exemption applied

The exemption applies to income received from relevant events held in a maximum period of 12-calendar months only. This begins with the date the first event is held in a ‘testimonial year’, even if that year covers more than one tax year.

Employed sportspersons who have a contractual entitlement or customary right to a sporting testimonial won’t be affected by these changes. They’ll be charged Income Tax on all their sporting testimonial income and the ‘one-off’ exemption won’t apply.

More than one event

A second testimonial event and a second testimonial are not the same and are treated differently for tax purposes.

If a sportsperson has another benefit match within 12-calendar months of the first match, the event income can qualify for the £100,000 exemption. Any spare exemption from the first match can be used on income from the next if it’s:

  • part of a testimonial season being administered by the same controller (normally the independent testimonial committee)
  • a second testimonial event rather than a separate sporting testimonial

For a different (separate) sporting testimonial the exemption cannot apply, no matter how close it is in timing to the first one.


Changes to the rules mean there can be more actions to take.

For a sportsperson

The independent testimonial committee should make the appropriate deductions from the sportsperson’s testimonial income.

If the sportsperson isn’t in employment elsewhere, they should give their P45 to the independent testimonial committee who will act like their employer in accounting for the income.

If the sportsperson doesn’t have a current P45 to give to the independent testimonial committee, they should confirm their circumstances with the committee using a new starter declaration.

If the P45 hasn’t been made available to the testimonial committee, the sportsperson may need to declare all of their income on a Self Assessment tax return. This is because the testimonial committee can only deduct basic rate tax in those circumstances and there may be more tax to pay.

Independent testimonial committee

The independent testimonial committee should make the appropriate deductions from the sportsperson’s testimonial income.

The independent testimonial committee should allow £100,000 of Income Tax free, then operate PAYE (see Second testimonial) if the:

  • sporting testimonial is non-contractual or non-customary
  • testimonial was announced on or after 25 November 2015
  • income is from an event or events taking place on or after 6 April 2017
  • income relates to a testimonial event or a testimonial season lasting no more than 12-calendar months
  • sportsperson is employed or was formerly employed as such

If the amount of income within 12-calendar months has not used up all of the £100,000 exemption, it can’t be rolled forward to set against future testimonial income.


When the sporting testimonial falls within the new rules explained above, income in excess of £100,000 must be reported to HM Revenue and Customs (HMRC).

You should report the sportsperson’s income to HMRC online and in real time, either at the time you make the payment or beforehand. You will need a PAYE scheme to do this.

For the purposes of the testimonial or benefit match, the independent testimonial committee will be treated as an employer. The committee should operate PAYE on any income above £100,000 to collect the Income Tax due. You must have a PAYE scheme before you can make payments to the sportsperson.

You can register with HMRC for a PAYE scheme up to 2 months before you start making payments. Read about the Basic PAYE Tools that will enable you to meet your PAYE obligations.

The amount of Income Tax to deduct will depend on whether the sportsperson is still employed elsewhere. If they aren’t employed elsewhere and they give you a current P45, you can use the tax code on it when you make a payment to them.

If you aren’t given a current P45, you can work out your new employee’s tax code and read the new starter checklist. You should pay over tax you have deducted to HMRC.

It’s important to remember, the obligations you have as an employer are limited to accounting for the taxes due only. You don’t have to:

  • hold employers’ liability insurance
  • enrol the sportsperson into a workplace pension scheme
  • provide a written statement (contract) of employment

Read about telling HMRC about a new employee.

Find out if there are VAT implications

As a member of an independent testimonial committee, you’ll need to consider whether any of the committee’s activities result in transactions that may be subject to VAT.

Whether activities are subject to VAT will depend on the circumstances. For example, admission for spectators to sporting events is subject to VAT whereas donations are not.


Events taking place before and after 6 April 2017

I’m involved in organising a testimonial season for a sportsperson. It was announced after 25 November 2015, but has events taking place both before and after 6 April 2017.

Only the income from events taking place on or after 6 April 2017 will be affected by the new rules. The income from events taking place before 6 April 2017 should be dealt with using previous rules.

Retired sportsperson’s testimonial

I’m organising a testimonial for a sportsperson who has now retired. Will the new rules apply?

The new rules apply to income raised for sportspersons whether they’re employees or former employees and as long as the main reason is to recognise their service as an employed professional sportsperson.

Testimonial for a deceased sportsperson

A sportsperson tragically died as a result of injuries received in a match. I’m arranging a sporting testimonial to raise funds for the family which will be paid directly to them. Will this fall into the new rules?

If payment is to be made direct to the family, it doesn’t fall within the new rules and you won’t have to account for Income Tax or NICs.

Any payment to the sportsperson’s estate will fall into the new rules, meaning Income Tax will be due, but NICs will not. Corporation Tax may apply in both cases because an independent testimonial committee is normally treated as an unincorporated company.

Work out what to report

Sportsperson A is awarded a testimonial match which raises £153,000 after costs. What should be reported to HMRC?

If the sportsperson qualifies for the £100,000 exemption, £53,000 should be reported to HMRC.

Make deductions before payment

The sporting testimonial has cleared the sum of £153,000. Can I pay the entire amount to sportsperson A?

No, you should account for the relevant amount of Income Tax and employer NICs before the payment is made.

What to do about non-cash benefits

What if testimonial income comes in the form of cash and a non-cash benefit such as a car?

The value of any non-cash or cash benefit should be added to the amount of money raised to get to the total of the income received.

Already had a testimonial before 6 April 2017

A sportsperson who’ll have a testimonial after 6 April 2017 and who’s previously had a testimonial prior to the new rules taking effect. Are they eligible for the £100,000 exemption and is the testimonial their first for tax purposes?

In this instance the testimonial would be their first for tax purposes, and the income raised would also be eligible for the £100,000 exemption as appropriate.

Second testimonial

Sportsperson B was awarded a second testimonial. The first testimonial took place after 6 April 2017 and raised £70,000. As this income fell within the £100,000 exemption, it was paid tax free and wasn’t reported to HMRC. The second testimonial raised £83,000 after costs. Do I report £53,000 for tax purposes?

No. The unused exemption can’t be rolled forward to be used for a subsequent testimonial. The entire amount of £83,000 must be reported to HMRC.

Published 6 April 2017
Last updated 20 November 2017 + show all updates
  1. Updated to mention the introduction of employer NICs on sporting testimonial payments above £100,000 will now take effect from 6 April 2019.
  2. Added translation to Welsh language.
  3. First published.