Accountants for Sports & Entertainment —
Image Rights, Touring Income & Talent Tax

HMRC has challenged many image rights structures and won cases where the commercial rationale was weak or the split between PAYE and image rights income was unrealistically high. Image rights structures must be commercially defensible — based on the genuine commercial value of the rights, not simply tax-minimisation.

When a musician or entertainer performs overseas, the host country deducts withholding tax on the payment. This withholding tax is often recoverable — either through double taxation treaty claims or as a credit against UK tax. Many performers simply absorb the withholding tax because their UK adviser doesn’t have international tax capability. We reclaim all recoverable withholding tax.

HMRC now receives data directly from digital platforms (YouTube, Spotify, Amazon Music, TikTok) under the digital platform reporting requirements. Content creators who have not been declaring their platform income face HMRC contact. If you haven’t declared digital income, voluntary disclosure is always better than HMRC-initiated enquiry.

Agent and management fees paid by artists and sports professionals are generally deductible as wholly and exclusively incurred for the purpose of the business. Many performers don’t claim these deductions correctly — particularly when fees are large percentages of total income.

An image rights company is a limited company that owns the commercial exploitation rights to the individual’s name, likeness, image, voice and associated intellectual property. Sports clubs and entertainment companies may pay a portion of the individual’s overall remuneration to the image rights company (rather than paying it all as PAYE employment income) on the basis that they are paying for use of the commercial image rather than solely for performance of work. HMRC requires the split to reflect the genuine commercial value of the image rights.

Music royalties are taxable income — from your records, songwriting, publishing or sync licensing. If you receive royalties as a self-employed musician or songwriter, they are reported on your Self Assessment. If royalties are paid through a limited company, they are subject to Corporation Tax. Royalties from overseas sources may be subject to withholding tax in the source country — we reclaim excess withholding tax under applicable double tax treaties.

For most content creators, income from YouTube ad revenue, brand sponsorships, merchandise sales, Patreon/subscription income and affiliate commissions is self-employment income, reported on Self Assessment. If the content creation activity is run through a limited company, income is subject to Corporation Tax. HMRC’s digital platform reporting requirements mean content creator income above de minimis thresholds is now reported to HMRC automatically by platforms.

IR35 applies to contractors who provide services through a limited company (Personal Service Company) and are deemed to be employed by the end client for tax purposes. Many TV, film and theatre workers are engaged through PSCs. If the working arrangements are equivalent to employment (direction, control, exclusivity), IR35 applies and PAYE must be deducted. We assess IR35 status for every performing arts client working through a PSC.

Sports professionals typically have high but short-duration earnings — maximising pension contributions during active years and investing surplus income in tax-efficient vehicles is essential for retirement provision. Pension annual allowance (£60,000 per year, or carry forward from previous years) allows significant contributions. SEIS/EIS investments offer income tax relief. Business Asset Disposal Relief can be available on disposal of the business at career end. We build retirement plans from the first professional contract.