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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Athletes: Trade or hobby?

That an athlete is described as an amateur is not decisive in considering whether he should be taxed under Part 2 Income Tax (Trading and Other Income) 2005. The leading figures in athletics are likely to be taxable on their earnings as persons carrying on a trade.

But the activities of most athletes remain a purely leisure pursuit or hobby, even though payments may occasionally be received, eg the Athlete Personal Awards from Lottery funding (see BIM50650 onwards). The distinction between a hobby on the one hand and a trade on the other is very much a question of fact and degree. Amateur status is not decisive.

Practical approach

In one or two years an athlete’s earnings may have exceeded the expenses. And, perhaps, the whole of the athlete’s time may be devoted substantially to sporting and associated activities. However, even the presence of both those pointers is not decisive. You will need more information before deciding whether the athlete is organising the activities in a business-like manner and with a view to making a profit.

In order to consider the badges of trade (see BIM20200 onwards), Officers will need the full facts concerning:

  • the nature and scale of the activities and the way they are organised
  • competitions and events entered in the relevant period, the athlete’s final position in each event and any prizes received
  • any grants or similar receipts from sporting or other organisations, and copies of documents setting out the terms under which they are received
  • any attendance or performance fees, and sponsorship or endorsement fees, with copies of the contracts and relevant documentation
  • any other income from associated activities including journalism, TV appearances etc
  • the terms of any agreement with an agent negotiating contracts with sponsors etc
  • the cost and nature of expenses

The principles to be considered are illustrated by way of three examples at BIM50606.

Income and expenses

For a discussion of the types of income which may be received by athletes, see BIM50610. For details of deductible expenses, see BIM50620.

For a discussion of pre-trading expenses of athletes, see BIM50665.