Reporting and paying tax on payments received for use of image rights, including payments made to an image rights company.
High-profile individuals, such as professional sportspeople and other celebrities, are often offered payments from those who want to use their name, image or other personal characteristic for commercial purposes. These characteristics are often referred to as ‘image rights’.
Reporting payments and paying tax
Payments for the use of an individual’s image rights can be reported and taxed in different ways.
Payments made to the self-employed
Payments are taxable as professional income and should be shown on the individual’s Self Assessment tax return.
Payments made to employees
Employers must ensure that all payments made to their employees comply with published guidance for the type of payment made. So payments made for the duties of an individual’s employment must be taxed as earnings and subject to PAYE - not treated as payments for the use of image rights. HMRC checks to ensure these payments are treated correctly.
Image rights companies
Image rights companies may license the use of an individual’s image to commercial partners, including the individual’s employer (if they have one), in return for image rights payments.
Where payments are made to an image rights company resident in the UK, the company will pay UK Corporation Tax on its profits.
Where the individual is a director or shareholder of that company, they may receive a financial reward, such as salary or dividends, in the same way as any other company director or shareholder. This income is subject to tax in the normal way.
For more information
More information on image rights and how they are taxed is published in HMRC’s Employment Income Manual.