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HMRC internal manual

Business Income Manual

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Athletes: Expenses

S34 Income Tax (Trading and Other Income) Act 2005

General principles

Professional athletes are subject to the same general rules as other persons carrying on a trade (see for instance BIM31000 onwards, which discusses the relationship between tax and accountancy).

This means that these athletes are entitled to deduct a range of expenses incurred in earning the trading profits of their professional activities subject to the general rules that the expense must be:

  • not capital in nature (see BIM35000 onwards), and
  • incurred wholly and exclusively for the purposes of the trade (see BIM37000 onwards).

Where an expense is incurred for more than one purpose, the wholly and exclusively rule will usually prevent a deduction from being allowed. However, where an identifiable part or proportion is incurred wholly and exclusively for the purposes of the athlete’s trade, that part is deductible.

Expenditure with an intrinsic duality of purpose

The guidance below is intended to explain the principles of the wholly and exclusively rule as applicable to professional athletes. It does not cover every situation or expense. It is expected that in most cases it will be relatively clear whether or not an expense has been incurred wholly and exclusively for the purposes of the athlete’s trade.

Some expenses are likely however to cause difficulty where there is an intrinsic duality of purpose, see BIM37900 onwards. Medical expenses including physiotherapy, special diets and training expenses are typical examples where the purpose of the expenditure may include a non-trade element.

The following cases should all be considered in connection with medical expenses:

  • Norman v Golder [1944] 26 TC 293, where it was concluded that doctor’s bills inevitably have a non-trade purpose (see BIM37940).
  • Murgatroyd v Evans-Jackson [1966] 43 TC 581, where nursing home fees were disallowed because recovery from ill health was not a trade purpose (see BIM37950).
  • Prince v Mapp [1969] 46 TC 169, where surgery costs to allow the taxpayer to play the guitar were disallowed (see BIM37945).
  • Parsons v HMRC Commissioners [2010] where the costs of a knee operation, chiropractor and masseur expenses incurred by a stunt man were allowable because the expenditure had a `special character dictated by the occupation as a matter of physical necessity’ and any private purpose was an `unavoidable effect’ of the expenditure. The expenses were therefore only incurred for the purposes of his profession. Other expenses associated with general health and fitness were disallowed.

With the above in mind, our view is that expenditure that would normally be considered to have an intrinsic duality of purpose, be it medical including physiotherapy, nutritional or sports training, may be deductible in the case of professional athletes where:

  • it is far removed from their ordinary needs as human beings,
  • it is of a special character dictated by their occupation as a matter of physical necessity, and
  • any private benefit is an unavoidable effect of the expenditure.

For example, physiotherapy treatment in the course of a competition or immediately before or after an event where any personal benefit is marginal may be deductable. Similarly, nutritional advice, supplements and training costs where the advice etc was so specific as being directly tailored to the particular athletic discipline may be deductible. A similar rationale may be applied to medical expenses although it must be noted that it will be more exceptional for medical costs to be allowable.

Whether an expense is ultimately deductible will remain dependent on the specific facts of each case.