Taxing testimonials - is the taxman playing ball?

16 July 2015

Bill Longe

Buried deep in the Budget notes the Chancellor announced his intention to issue a consultative document on the tax treatment of sums received from sporting testimonials. A Court decision in 1927 gave weight to the claim that the proceeds from such events are free of tax. 

Back then our sporting superstars were often paid the equivalent of five Woodbine cigarettes and a half of bitter for their efforts, and so there was some merit in receiving a tax-free sum at the end of their careers. Time has moved on and today the sporting superstars are paid stratospheric sums, so the Chancellor has recognised there is now little justification for the tax exemption. Indeed tax legislation has moved on a great deal since 1927 and today the opportunities to claim the exemption are few and far between.

Apart from the infamous Julian Dicks testimonial match which included a 17 man brawl, the matches themselves tended to be rather tame backslapping affairs. In the Premier League, footballers’ testimonials are few and far between and where they do happen, the proceeds are often donated to charity.

Other sporting stars may not enjoy the same level of pay as some of our footballers and so it appears the taxman is interested in maintaining an exemption from tax, albeit a fairly modest one, for proceeds from testimonial events. The exemption is unlikely to spark interest from the higher paid stars, but nevertheless will be welcomed by the lesser lights.