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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Athletes: Sources of income

Athletes may receive all the following types of income:

  • Athlete Personal Awards funded by the Lottery
  • grants and gifts
  • sponsorship and endorsement fees
  • appearance, participation and performance fees

The time at which taxable income must be brought into account is discussed at BIM50625.

Athlete Personal Awards, grants and gifts

An athlete who receives only Athlete Personal Awards (see BIM50650) is unlikely to be carrying on a trade (see BIM50605). In terms of the tax treatment of these awards, see BIM50665 and BIM50675.

Where a grant or gift is received from a commercial concern, the facts and documentary evidence may however indicate that the payment is in reality a kind of sponsorship or endorsement fee (see BIM50606, Example 2).

Sponsorship and endorsement fees

Sponsorship, or product endorsement, usually involves the athlete lending his name to a promotional campaign. This may be through advertisements or through personal visits to retail outlets. The product may not, of course, have any athletic or other sporting connection. The arrangements will normally be contractual, though the form of the contract may vary from a formal written agreement to an informal letter or even a telephone call. Where accounts are under enquiry it will normally be useful to obtain a copy of any written agreements or other documentation.

The tax treatment of this income depends on whether the athlete is treated as trading or carrying on a hobby (see BIM50606, Example 2 and Example 3). If it is a hobby, the income will be taxable as miscellaneous income under Part 5 Chap 8 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005). If the athlete is trading, the income will be taxable as trading receipts.

Athletes are not permitted to wear clothes bearing sponsorship names or logos in competitions, because usually the Athletics Associations have already made agreements with manufacturers that only their kit should be worn.

Appearance, participation and performance fees

In an attempt to attract leading athletes, many competitions organisers offer fairly substantial sums for appearances or participation at meetings. In addition, bonuses may be paid for meritorious performances such as winning or setting records.

Athletes may also receive fees from activities not directly connected with sport, such as writing newspaper articles, making TV appearances and opening supermarkets.

The tax treatment of this income depends on whether the athlete is treated as trading or carrying on a hobby (see BIM50606, Example 2 and Example 3). If it is a hobby, the income will be taxable as miscellaneous income under Part 5 Chap 8 ITTOIA 2005. If the athlete is trading, the income will be taxable as trading receipts.