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HMRC internal manual

Business Income Manual

Sports testimonials: Testimonial Committee - PAYE and NIC

In a situation where a testimonial committee is independent of the club that employs the sports player and yet the player has a right or expectation to a testimonial that derives from the employment, the testimonial committee might be liable to tax on its trading profits and other income and also responsible for operating PAYE and accounting for the tax on the sum remaining to be paid over to the beneficiary.

In these circumstances the sum remaining to be paid to the beneficiary is chargeable to Income Tax as earnings (see EIM64120).

National Insurance Contributions (NIC) liability depends upon what is provided to the sports person. Where that takes the form of cash earnings or vouchers payments, liability rests with the recipients’ employer who must account for and pay Class 1 NIC in the normal manner; not the committee.

Where the committee independently provides a benefit (for example, a holiday or a set of golf clubs) without employer involvement or facilitation then it is the committee who must meet Class 1A NIC liabilities on that benefit.

The testimonial committee is not entitled to a deduction in computing its trading profits in respect of any of these sums as they are not expenses incurred in earning those profits.