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HMRC internal manual

Employment Income Manual

Tax treatment of Rugby footballers: signing-on fees after 1 January 1996: general: conditional payments

A payment made to a player on entering into a contract as a professional Rugby footballer will usually be chargeable in full as employment income (see EIM00700). This is so even if the payment is said to be for “loss of amateur status”. Almost all major sports are now open to both amateurs and professionals, with the result that amateur status can no longer be said to have any real value.

In Jarrold v Boustead (41TC701) a payment to a Rugby League player for giving up his amateur status was held not to be chargeable to tax. That case was heard more than 40 years ago, when there was still a clear distinction between amateur and professional sport. The case is still relevant in so far as it demonstrates the general principle that a payment to a person on taking up employment is not necessarily from the employment (see EIM00710). However, it no longer has any direct relevance in relation to signing-on fees paid to Rugby footballers.

As regards signing-on fees to Rugby League players before 2 January 1996, see SE64165.

Conditional payments

In Riley v Coglan (44TC481) a Rugby League player received a signing-on fee for agreeing to serve the club for the rest of his football career. The payment was held to be taxable as employment income.

Conditional signing-on fees that are taxable in full on the Riley v Coglan principle include:

  • sums payable on completion of a specified period of service, or after a specified number of matches. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • sums payable on the attainment of county or international honours
  • such part of the signing-on fee payable on signature of the contract as is repayable by the player if he fails to complete his specified period of service, or to play a specified number of matches, or in any other circumstances referable to service.

Signing-on fee payable on a transfer

See EIM64115.