Policy paper

Draft guidance: tax treatment of image rights payments under the new legislation

Updated 6 November 2026

This draft guidance is intended to illustrate when an image rights payment may fall within, or outside, the scope of the proposed legislation. It will be published in HMRC’s Employment Income Manual when the legislation comes into effect on 6 April 2028.

The guidance may be subject to change before publication.

1. EIM99999 - Employment income: image rights payments: scope of the charge

1.1 Section 226F ITEPA 2003

Section 226F applies to image rights payments that are related to an individual’s employment.

The legislation applies to:

• image rights payments made by the employer or a person connected with the employer (including a company)
• image rights payments made by a third party, but arranged or otherwise facilitated by the employer or a person connected with the employer
• other image rights payments made ‘by reason of the employment’

Payments which are not related to an employment (as defined by the new legislation) are not within the scope of Section 226F.

1.2 By reason of the employment

‘By reason of the employment’ has the same meaning as in other parts of ITEPA 2003 (see EIM20501 and EIM20503).

It means that the employment must be an operative cause of the payment being made. It does not need to be the only cause, or even the main cause, but an incidental cause is not sufficient.

Whether a payment is made by reason of the employment will depend on the particular facts of each case.

An individual being sought out as a promotional partner (by someone unconnected with their employer) because they have developed a high public profile through their employment will not, by itself, mean that the image rights payment is by reason of the employment.

All image rights payments made, arranged or otherwise facilitated by the employer (or a person connected with the employer) are deemed to be related to employment. It is not necessary to consider whether those payments are made by reason of the employment.

1.3 Arranged or otherwise facilitated

There is no statutory definition of what is meant by ‘arranged’ or ‘facilitated’. It will usually be clear from the facts whether the employer is involved in the arrangements.

Obtaining permission from an employer (which may be required by the employment contract) to enter an arrangement with an unconnected third party will not, by itself, mean that the employer arranged or facilitated the image rights payment. However, if the employer receives consideration from the third party for providing permission, HMRC would view the image rights payment as being arranged or facilitated by the employer or otherwise arising by reason of the employment. Section 226F would apply.

An employer providing an employee’s contact details to a brand enquiring about an arrangement with the individual will not, by itself, mean that the employer arranged or facilitated the image rights payment. However, if the employer selected or recommended an individual for the opportunity, negotiated on behalf of the individual, or received consideration from the brand, HMRC would view the image rights payment as being arranged or facilitated by the employer or otherwise arising by reason of the employment. Section 226F would apply.

2. Examples - section 226F(2)(a) - employer payments

2.1 Example 1

A professional sports club signs a new player and agrees to pay them the equivalent of £80,000 per year salary and £20,000 per year in respect of image rights.

The salary is earnings within the definition at section 62 ITEPA 2003, and the image rights payment is treated as earnings pursuant to section 226F(2)(a) because it is made by the employer.

It does not matter whether the image rights payment is due under the employment contract or a separate agreement.

The image rights payment will be chargeable to income tax and Class 1 National Insurance Contributions.

2.2 Example 2

A radio station hires a famous new presenter. It is agreed that the employer will set up a subsidiary company to undertake promotional activities, which will pay the presenter an additional £20,000 per year in respect of image rights in addition to their salary.

The image rights payment is treated as earnings pursuant to section 226F(2)(a) because it is made by a company connected with the employer.

It does not matter whether the image rights payment is due under the employment contract or a separate agreement.

The image rights payment will be chargeable to Income Tax and Class 1 National Insurance contributions.

3. Examples - section 226F(2)(b) - arranged or facilitated

3.1 Example 3

A sportswear brand wants to engage a specific sportsperson employed by a professional sports club to take part in an advertising campaign. The sportsperson is not represented by an agent, so the brand approaches the club and asks to be put in contact with the employee.

The club provides the brand with the employee’s direct contact details. The club receives no consideration and has no further involvement in the discussions between the individual and the brand.

The individual enters an agreement with the brand and receives a payment for participating in the advertising campaign. The club would not be regarded as having arranged or facilitated the payment for the purposes of section 226F(2)(b).

As section 226F(2)(b) does not apply, the employer would need to consider whether a tax charge arises pursuant to section 226F(2)(c).

3.2 Example 4

A cosmetics brand wants to engage a specific sportsperson employed by a professional sports club to take part in an advertising campaign. The sportsperson is not represented by an agent, so the brand approaches the club and asks to be put in contact with the employee.

The club arranges a meeting between the brand and the employee. A representative of the club attends the meeting and negotiates an agreement with the brand on behalf of the employee.

The individual receives a payment from the brand for participating in the advertising campaign. The club would be regarded as having arranged or facilitated the payment, so the image rights payment is treated as earnings pursuant to section 226F(2)(b).

The image rights payment will be chargeable to Income Tax and Class 1 National Insurance contributions.

3.3 Example 5

A health and wellness brand wants to engage a specific sportsperson employed by a professional sports club to take part in an advertising campaign. The sportsperson is not represented by an agent, so the brand approaches the club and asks to be put in contact with the employee.

The club responds that it will only make the contact if the brand pays an introducer fee to the club. The brand agrees, so the club provides the brand with the employee’s direct contact details.

The individual negotiates an agreement and receives a payment from the brand for participating in the advertising campaign. The club would be regarded as having arranged or facilitated the payment, so the image rights payment is treated as earnings pursuant to section 226F(2)(b).

The image rights payment will be chargeable to Income Tax and Class 1 National Insurance contributions.

3.4 Example 6

A professional sports club negotiates a contract renewal for their star player. It is agreed that the player will undertake additional promotional activities for the club’s sponsors. The sponsors will reduce amounts payable to the club by £20,000 each year and pay the same amount to the player instead.

The image rights payment is made to the player by the sponsor rather than the employer, and the sponsor is not connected with the employer, so section 226F(2)(a) does not apply.

The image rights payment is treated as earnings pursuant to section 226F(2)(b) because it is arranged or otherwise facilitated by the employer.

The image rights payment will be chargeable to Income Tax and Class 1 National Insurance contributions.

3.5 Example 7

A sportswear brand approaches a professional sports club, seeking to have some of its players take part in an advertising campaign. The players will take part in photoshoots and be pictured in advertisements wearing the brand’s clothes.

The club negotiates terms with the brand and selects a group of players to participate. The brand pays a fee to each of the participating players and to the club.

The payments to the players are treated as earnings pursuant to section 226F(2)(b) because they are arranged or otherwise facilitated by the employer.

The image rights payments will be chargeable to Income Tax and Class 1 National Insurance contributions.

4. Examples - section 226F(2)(c) - by reason of employment

4.1 Example 8

A clothing brand approaches a professional sportsperson directly and they enter into a contract for an advertising campaign. The player will take part in photoshoots and be pictured in advertisements wearing the brand’s clothes, in exchange for a fee.

The club is not involved in arranging or facilitating the arrangement, although the player does obtain permission from the club before signing the contract.

The advertisements do not refer or allude to the club in any way.

While the player’s reputation as an elite sportsperson is relevant to them being offered the deal, the employment is only an incidental cause. HMRC would accept that the payment is not made by reason of the employment.

The payment to the player does not fall within the scope of Section 226F.

4.2 Example 9

Wakefield Woodpeckers win the top-flight national league in their sport. Neither the club, nor any of its players, has won the league before.

Soon afterwards, the club’s captain is approached by Wakefield Biscuits, a leading national food manufacturer based in the same city who have no previous sponsorship relationship with the club.

The player agrees to take part in a ‘Biscuits for Winners’ campaign of national television and social media advertisements for the manufacturer, in exchange for a fee.

The club is not involved in arranging or facilitating the arrangement, although the player does obtain permission from the club before signing the contract.

Although the player is not pictured in club clothing, the advertisements have a strong red and green visual theme which corresponds to the club’s colours.

Factors which indicate that the payment by reason of the player’s employment with the club include:

• commonalities in location and branding between Wakefield Woodpeckers and Wakefield Biscuits
• the ‘for winners’ theme which alludes to the club’s recent success
• the red and green visual theme which corresponds to the club’s colours

The image rights payment is treated as earnings pursuant to section 226F(2)(c) because it is made by reason of the employment. 

The image rights payment will be chargeable to Income Tax and Class 1 National Insurance contributions.

4.3 Example 10

A brand plans to launch an advertising campaign with a theme of ‘elite performance’ and wants a professional sportsperson to act as the face of the campaign.

The brand identifies a number of individuals across a range of sports with sufficient brand recognition. They undertake a review of these individuals against a range of criteria, prioritising career length and prolonged top-level success. They eventually select an individual whose club most recently won the top-flight national league in their sport. The player has won the league twice before with other clubs.

There is no previous sponsorship relationship between the brand and the club. The club is not involved in arranging or facilitating the arrangement, although the player does obtain permission from the club before signing the contract. The advertisements use language like ‘elite’ and ‘winning’ but do not refer or allude to the club.

HMRC would accept that it is the player’s personal profile and history of consistent performance, rather than their current employment, which enables them to enjoy the benefit. The player’s recent success in their current employment is an incidental factor rather than an operative cause of them being offered the deal.

The payment is not made by reason of the employment and does not fall within the scope of Section 226F.

5. Examples - boot deals

5.1 Example 11

A professional sportsperson employed by a professional sports club enters into a contract with a sportswear brand, agreeing to wear its branded boots in all matches in which they participate for a specified period of time and irrespective of the identity of their employer.

The agreement is negotiated and contracted directly between the player and the brand. Although the player obtains the club’s consent before signing, the club is not involved in arranging or facilitating the arrangement.

Payment is made directly by the sportswear brand, which is neither the employer nor connected with the employer.

While the player’s reputation as an elite sportsperson is relevant to them being offered the agreement, the agreement applies irrespective of the identity of their employer. HMRC would accept that the payment is not made by reason of the player’s employment.

As none of sections 226F(2)(a), 226F(2)(b) or 226F(2)(c) apply, the payment does not fall within the scope of section 226F.

5.2 Example 12

A sportsperson signs their first professional contract with a sports club. They have not previously had a boot sponsor.

Soon after signing, the club arranges a meeting between the player and a sportswear brand which is also the club’s main kit sponsor. The brand offers the player a deal on the same terms it has offered to other new players at this club.

The player accepts the offer, and contracts directly with the sportswear brand to wear its branded boots in all matches in which they participate for a specified period of time and irrespective of the identity of their employer.

The image rights payment is treated as earnings pursuant to section 226F(2)(b) because it is arranged or otherwise facilitated by the employer.

The image rights payment will be chargeable to Income Tax and Class 1 National Insurance contributions.

6. Part 7A ITEPA 2003

Some image rights arrangements may also fall within the rules for employment income provided through third parties in Part 7A ITEPA 2003 (see EIM45000). If an image rights payment is treated as earnings under section 226F, and is also a relevant step under Part 7A, section 554Z6 adjusts the Part 7A income to prevent the same amount being taxed twice.