EIM64122 - Tax treatment of benefits matches and testimonials given to sportspersons – changes from 6 April 2017 – conditions for tax exemption on first £100,000 payment

Section 306B ITEPA 2003

From 6 April 2017, a ‘one-off’ once in a sportsperson’s lifetime Income Tax exemption is allowed on the first £100,000 of sporting testimonial payments made out of money raised by the testimonial, providing certain conditions are satisfied.

Conditions

The limited statutory exemption under Section 306B ITEPA 2003 only applies to income from a sporting testimonial that is:

• treated as earnings under section 226E ITEPA (see EIM64121) received from a single testimonial event, or a series of events held within a period of 12 months beginning with the day on which the first event or activity took place,
• the events are organised/controlled by an independent person, normally a testimonial committee

The sporting testimonial must be subject to tax under section 226E only. If the sportsperson has a contractual right or a customary expectation that they will receive a testimonial, any income from the testimonial will instead be taxable as earnings pursuant to section 62 ITEPA 2003. The section 306B exemption will not be available.

Exemption

Where the conditions are met, Section 306B exempts the first £100,000 of sporting testimonial payments made out of money raised by the testimonial.

The exemption can be spread across more than one tax year with any amount unused being carried forward into the next tax year, up to the maximum amount exempt from Income Tax of £100,000.

This exemption only applies where a sporting testimonial was announced on or after 25 November 2015 for income from events taking place on or after 6 April 2017.