Sweeping changes for UK sports stars and image rights

The world of elite sport is not just about athletic performance—it’s also a major commercial enterprise.

Top athletes, especially footballers, tennis stars, and Olympians, have long leveraged their public image for lucrative sponsorships, endorsements, and media opportunities. In tax planning terms, this has given rise to a crucial concept: image rights.

In the UK, the use of overseas image rights companies has been a common strategy among sports stars to manage and reduce their tax liabilities. However, sweeping reforms to the UK’s non-domicile (“non-dom”) tax rules, introduced in April 2025, have dramatically altered the landscape.

This article explores how sports personalities historically used offshore image rights arrangements, how these fitted within the old non-dom tax regime, and what has changed under the post-April 2025 rules.

What are image rights?

Image rights refer to the commercial use of a person’s name, likeness, voice, signature, or other personal characteristics. For high-profile sports stars, these rights can be worth millions and are often monetised through:

• Endorsement deals (e.g. Nike, Adidas, Rolex)
• Sponsorships
• Television appearances
• Video games and merchandise
• Social media promotions.

In the UK, the use of image rights arrangements allows athletes to separate endorsement income from regular employment income (such as club wages), enabling more favourable tax treatment—especially when using overseas structures.

The pre-April 2025 position: image rights and non-dom taxation

Use of offshore image rights companies

Historically, UK-based but non-domiciled sports stars often established offshore image rights companies—typically in low-tax jurisdictions such as the British Virgin Islands, Jersey, or Guernsey. Here’s how the arrangement typically worked:

• The athlete transferred their image rights to an offshore company they owned
• This company entered into endorsement and licensing agreements with brands
• Income from those agreements was paid directly to the offshore company, not the athlete
• Under the UK’s remittance basis, the athlete was not taxed on foreign income held outside the UK, unless they brought (or “remitted”) the funds into the UK.

This allowed sports stars to defer or avoid UK tax on large portions of their income, provided the money stayed offshore.

HMRC scrutiny and “dual purpose” issues

HMRC (HM Revenue & Customs) has for years scrutinised these arrangements, especially when:

• Image rights income was artificially inflated
• Clubs paid players via image rights entities to avoid employer NICs or income tax
• The athlete had little commercial value outside of playing performance.

Despite this, the structure was still widely used, especially by non-domiciled sportspeople, because of the tax advantages of the remittance basis.

What changed in April 2025?

In the Spring Budget 2024, the UK government announced a major overhaul of the non-dom regime, effective from 6 April 2025. These changes were part of a broader push toward a fairer and more globally consistent tax framework, with significant implications for sports stars and other high-net-worth individuals.

Abolition of the remittance basis

The biggest change was the abolition of the remittance basis. This means:

• UK tax residents, regardless of domicile status, are now taxed on their worldwide income and gains
• There is no longer a tax advantage to keeping image rights income offshore—it is taxable in the UK even if not remitted
• This effectively shuts down the primary benefit of the offshore image rights model for non-doms.

Transitional rules

To ease the impact, transitional provisions were introduced:

• Overseas income for 2025–26 may be taxed at a 50% rate for those losing the remittance basis
• Overseas assets held as of April 2025 may be eligible for rebasing relief, so only gains from that date forward are taxable
• A temporary repatriation facility allows money to be brought into the UK at a reduced tax rate for a limited time.

Still, these reliefs are temporary and do not restore the long-term viability of offshore image rights for UK residents.

Focus on substance and residency

HMRC also signalled increased focus on:

• The substance of offshore entities (i.e. are they genuine businesses or tax vehicles?)
• Whether the athlete remains in control of the offshore company (which may cause UK tax issues under “transfer of assets abroad” rules)
• Dual residency issues, especially for stars with homes and business operations in multiple countries.

Post-April 2025: what are the new options?

Given these changes, sports stars—especially foreign players based in the UK Premier League or Six Nations tournaments—need to rethink their tax strategies.

UK image rights companies

Some may choose to establish UK-based image rights companies, allowing:

• Endorsement income to be earned through a corporate vehicle
• Profits taxed at UK corporation tax rates (19%–25%) rather than higher personal income tax rates (up to 45%)
• Legitimate expense deductions for business costs.

However, any personal benefit (e.g., drawing a salary or dividend) is still subject to income tax. The days of tax-free offshore deferral are effectively over.

Full transparency and compliance

Advisers now urge sports clients to:

• Declare all foreign endorsement income on UK tax returns
• Review existing offshore structures to ensure they are not triggering anti-avoidance provisions
• Prepare for greater reporting obligations under global tax exchange frameworks like the Common Reporting Standard (CRS).

Case study: a footballer pre- and post-April 2025

Before April 2025

• A Spanish Premier League player is UK tax resident but non-domiciled
• He licenses his image rights to a Jersey-based company
• Adidas pays £2 million annually for endorsements
• The income stays in the Jersey account—no UK tax is due unless remitted.

After April 2025

• The player is taxed on worldwide income, including the £2 million
• If the Jersey company is under his control, anti-avoidance rules may attribute income directly to him
• His advisers now recommend using a UK company, with clear records and commercial purpose.

The April 2025 tax reforms mark a significant turning point for UK-based sports stars, especially those who previously relied on non-dom status and offshore image rights arrangements to reduce their tax liabilities. The abolition of the remittance basis means endorsement and image rights income earned anywhere in the world is now within HMRC’s reach.

Going forward, compliance, transparency, and efficient UK-based structures will be essential. While athletes can still plan their affairs tax-efficiently—such as using UK companies and deducting legitimate business expenses—the era of offshore image rights loopholes for UK residents is effectively over.

For sports stars and their advisers, this is not just a tax issue—it’s a wake-up call to adapt to a new global tax reality.