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HMRC internal manual

Business Income Manual

Athletes: Lottery funding: Athlete Personal Awards: Other categories of charge

Tax treatment of Athlete Personal Awards if the athlete is not carrying on a trade

Conditions attached to the award

The standard letter of offer of an award does not require the recipient to do anything beyond:

  • participating in the World Class Performance Programme (namely a training and competition programme) submitted by the sporting body concerned, and
  • complying with the requirements of the ‘Performance Athlete Agreement’ (for example, allowing the non-exclusive use of their name, image performance and appearance in events connected with the Programme).

Is the award taxable as employment income?

The standard letter of offer does not represent a contract of employment and the award letter does not create an ‘employment’. As such the Athlete Personal Award is not taxable as employment income.

Where, exceptionally, a non-standard award appears to have been made with different terms and conditions and an Officer thinks that an employment may exist, the matter should be referred to the Status Team for consideration.

Is the award taxable as an annual payment?

For the Athlete Personal Award to be taxable as an annual payment under Chap 7 Part 5 Income Tax (Trading and Other Income) Act 2005 it must be:

  • in the nature of income rather than capital,
  • pure income profit in the hands of the recipient,
  • paid under a legal obligation, and
  • capable of recurrence.

The conditions of the Athlete Personal Awards have been drawn up in such a way that the last criterion is not met and accordingly the award should not be an annual payment. This does, of course, depend on the specific wording of the agreement. Questions of whether a payment is an annual payment will almost always have to be considered by reference back to first principles. Contact CTISA (Technical) for further guidance.

Is the award taxable as miscellaneous income?

The miscellaneous income rules in Chap 8 Part 5 ITTOIA 2005 are alternative taxing provisions where the athlete’s activities fall short of trading. However, these provisions can only apply to income contractually received in return for work done, services rendered or facilities provided. Therefore, as a grant without such conditions, the Athlete Personal Award is not taxable as miscellaneous income. This is discussed at BIM50630.

Is the award taxable at all?

If the athlete is not considered to be carrying on a trade (see BIM50605) then, on the basis of the analysis of alternative charging provisions above, the award is not taxable in the hands of the athlete. This is explained in BIM50606 Example 1.

However if in any particular case non-standard documentation is received, the question of whether another source of liability arises should be considered from first principles. Contact CTISA (Technical) for further advice on documentation.

The tax treatment of the award where the athlete is carrying on a trade is covered at BIM50665.