Sick & injured sportspersons could have to pay tax on public donations, warns tax body

The Association of Taxation Technicians (ATT) has warned that HMRC proposals to tax all income from sporting testimonials and benefit matches could adversely affect certain individuals.1 The Association is calling for the complete exemption from income tax and National Insurance Contributions (NICs) on such receipts for sportspersons whose careers have been prematurely cut short.   

Currently, a favourable tax treatment applies when testimonials or benefit matches are arranged by an independent committee; all public donations received by the sports-person are free of income tax and NIC. However, HMRC have become concerned that this treatment no longer reflects the modern world of sport and intends to subject all such payments to income tax and national insurance subject to a limited exemption.2

Paul Hill, Chairman of the ATT’s Technical Steering Committee said:

“If HMRC is intent on taxing testimonial donations, then we welcome the introduction of an exemption. Subject to it being set at the right level, that should protect the payments made to the many sportspeople who are on very significantly lower levels of pay than the headline-grabbing amounts paid to elite professionals.

“However, we are keen to see certain situations removed from the tax system altogether. In particular, where careers have been cut short prematurely due to injury or ill-health we believe there should be a complete exception from any tax or NIC liability.  Any employee (in any job) whose employment is terminated by reason of injury or disability is entitled by law to receive an unlimited termination payment completely free of tax and NIC. We believe that a similar treatment should be applied to testimonial payments made in comparable circumstances.

“HMRC, in its justification for taxing all testimonial payments, has compared the donations made by the public at sporting events to tips left by the public in restaurants or given to taxi drivers. We believe that the two situations are not comparable as testimonial donations represent a fan’s accrued appreciation for a particular sports personality. Tips are usually a generic form of appreciation and the personal identity of the recipient is usually not a factor. We believe it is right to identify situations where the traditional custom of a sports testimonial does still exist and that these should be protected in the legislation as true exceptions. We strongly believe that careers brought to an end through injury or ill-health ought to be two shining examples of such exceptions and would encourage HMRC to recognise these two as such and consider if any other exceptions should be identified.”


Notes for editors

1.       The response of the Association of Taxation Technicians to HMRC’s consultation, Tax Treatment of Income from Sporting Testimonials – Proposals for Legislation, can be read in full here.

2.       HMRC has not indicated the level at which the statutory exemption might be set.

3.       Association of Taxation Technicians

The Association is a charity and the leading professional body for those providing UK tax compliance services. Our primary charitable objective is to promote education and the study of tax administration and practice. One of our key aims is to provide an appropriate qualification for individuals who undertake tax compliance work. Drawing on our members' practical experience and knowledge, we contribute to consultations on the development of the UK tax system and seek to ensure that, for the general public, it is workable and as fair as possible. Our members are qualified by examination and practical experience. They commit to the highest standards of professional conduct and ensure that their tax knowledge is constantly kept up to date. Members may be found in private practice, commerce and industry, government and academia.

The Association has over 7,800 members and Fellows together with over 5,500 students. Members and Fellows use the practising title of 'Taxation Technician' or ‘Taxation Technician (Fellow)’ and the designatory letters 'ATT' and 'ATT (Fellow)' respectively.