Endorsement contracts for top sportsmen and women are typically split between “active” and “passive” income. Active income relates to a player’s earnings from their playing performance (e.g. tournament win bonuses, ranking bonuses etc.). Passive income relates to factors such as name, fame, image and likeness (i.e. unrelated to the players sporting performance in particular matches or games).

Players’ endorsement income is apportioned to their UK income tax return based upon the number of matches/events they participate in the UK divided by the total number they compete in globally throughout the year.

This problem is even more important now due to:

• HMRC increasingly taxing foreign players on all of their global endorsements (Pre 1999 HMRC only taxed on their active income)
• the top rate of tax in the UK having increased to 50%
• increased awareness of players and agents.

For more information please see the taxation section