EIM64120 - Tax treatment of rugby and soccer players: benefit matches

Players are sometimes granted benefit matches and receive the proceeds personally. In considering the taxation of such proceeds the usual factors relevant to deciding whether a sum is earnings from employment apply (see EIM00600 onwards). The circumstances in which gifts are assessable under Section 62 ITEPA 2003 are dealt with at EIM01450.

Where the player's club grants the benefit after a set qualifying period of service the proceeds are taxable under Section 62 ITEPA 2003 whatever the arrangements for staging the match are. The agreement to do so may not be recorded in the written contract and it is therefore necessary to specifically enquire about any agreement, whether written or verbal, which exists outside the main contract.

Where there is no entitlement to the benefit (see EIM00630) and no custom exists in respect of it (see EIM00640) then the proceeds are not within Section 62 ITEPA 2003. This will usually be the case where the match is organised by a testimonial committee independent of the club. However, you should not agree that the proceeds of a benefit match escape liability simply because such a committee exists. You must first establish the full facts and apply the principles outlined above.

Relevant tax cases are:

  • Reed v Seymour (11TC625)
  • Davis v Harrison (11TC707)
  • Corbett v Duff (23TC763)
  • Moorhouse v Dooland (36TC1)
  • Moore v Griffiths (48TC338).

Do not overlook the possibility that the benefit may be connected with the termination of employment so that Section 401 ITEPA 2003 applies (see EIM13000 onwards).

Increasingly, a benefit takes the form of a benefit year and events are staged, usually by an independent testimonial committee, for the player's benefit. The committee will be an unincorporated association chargeable to corporation tax and its income must be considered under Corporation Tax rules.