The player forms a limited company they control and licenses their image rights to it. The club then contracts with the company rather than the player for the right to use the player's image, paying the company directly. The company receives that income, deducts its costs, and pays corporation tax on the profit. The player extracts money from the company later, as salary or dividends, paying personal tax at that point.

Historically this was the entire point. A player receiving the money personally pays income tax at up to 45% plus employee National Insurance at 2%. Routed through a company, the profit has been taxed at the 25% corporation tax rate applying since April 2023, and the club also avoided employer National Insurance on the payment (Crowe UK). The gap between roughly 47% and 25% is what drove three decades of structuring.

Published worked examples give a sense of scale: for a player paid around £1.8m a year, a club could save up to roughly £190,000 per player per year through an image rights structure (Crowe UK). Note whose saving that is. A material part of the benefit accrues to the club through avoided employer National Insurance, which is why clubs have historically been enthusiastic proposers of these arrangements.

The UK advantage is being legislated away. Under proposals announced in the 2025 Budget and expected in Finance Bill 2026–27, from 6 April 2027 any image rights payment "related to an employment" will be treated as employment income, subject to PAYE and Class 1 National Insurance (HW Fisher). Once a payment connects to the employment it goes through payroll regardless of whether it is paid to a company. HMRC estimates the reform raises around £40m a year.

No, and the distinction is now the single most important thing an agent can understand. Payments from the player's employing club become employment income. But genuinely independent, off-field commercial income — a personal boot deal, a sponsorship the player secured themselves — is not employment-related, and an image rights company remains a legitimate vehicle for it. Advisers expect IRCs to retain real value for that off-field activity (HW Fisher).

The treatment of sponsors shared between club and player. If a brand sponsors both the club and the player individually, it is not obvious whether the player's income from that brand is "related to the employment". Practitioners have flagged this as requiring HMRC clarification (HW Fisher). As at August 2026 it remains open, and any agent told the answer is settled should ask to see the authority.

There are real and recurring costs: incorporation, annual accounts, corporation tax filings, and the professional advice needed to keep the structure defensible. Published figures vary too much to quote a reliable number, and any adviser quoting a precise annual cost should be asked what it covers. The relevant point for an agent is simpler — the costs are ongoing and payable whether or not the company receives meaningful income.

When the tax saved is less than the cost of the structure plus the risk of challenge. After April 2027 that threshold moves sharply, because payments from the employing club no longer generate the saving at all. For a young player whose only image rights income would come from their club, the honest answer post-2027 is that an IRC has little purpose. Where independent commercial income exists, the calculation is different.

Because an empty structure is an invitation. A company with no genuine commercial activity, receiving payments that correlate suspiciously with salary, is exactly the profile HMRC challenges — and the player carries the cost of defending it. There is also opportunity cost: professional fees paid by a player earning modestly are real money. Setting up early does not "get ahead"; it creates exposure before there is anything to protect.

Keep it simple and preserve optionality. Take image rights income personally and pay tax on it. Make sure the playing contract does not grant away rights that could be commercialised later. Keep records of any independent commercial activity from the beginning, because that evidence is what makes a future structure defensible. The structure can be built when the income justifies it; the evidence cannot be created retrospectively.

Apportionment is the split between what the player is paid for playing and what they are paid for their image. It decides everything because it determines how much income sits outside employment taxation. Set it credibly and the arrangement holds. Set it by picking a percentage that produces a desirable tax outcome and it is vulnerable, because the split is the first thing any challenge examines.

There is no published safe harbour, and any agent told "X% is fine" should treat that as a warning sign. The tribunal record shows that what fails is not a particular number but the absence of reasoning behind it. In Hull City AFC (Tigers) Ltd v HMRC the payment was £187,200 a year — exactly 25% of the player's £748,800 basic wage — with no documented valuation methodology or business case (Devereux Chambers). The precision of the percentage was itself evidence against it.

That failing to apportion at all is its own problem. In Bryan Robson Ltd v HMRC [2025] UKFTT 56, the ambassador agreement with Manchester United combined image rights exploitation with a minimum appearance obligation, but attributed no specific value to either element. Judge Beare noted this was the first time a tribunal had to dissect payments between the two, and the parties were left to negotiate an apportionment or return to tribunal (ICAS).

It should track genuine commercial reality, which means it can legitimately rise — and should be re-evaluated when it does. A player with growing third-party endorsement income has evidence supporting a larger image rights component. The mistake is setting a percentage at signature and never revisiting it, so that the split reflects the player's profile years earlier rather than their commercial position now.

Evidence that the image rights company does real work. That means negotiating and holding sponsorship agreements, managing the player's commercial diary, licensing image rights to clubs, and owning and monetising the player's social media presence (Crowe UK). A company that merely receives money from the employing club and does nothing else is not carrying on a business — it is a conduit, and it will be treated as one.

A written valuation explaining how the figure was reached. Evidence of third-party interest in the player's image. Records of what the club actually did with the rights it paid for. Board minutes and commercial correspondence showing the company operating as a business. Contemporaneous documents carry weight; reconstructions prepared once an enquiry opens carry very little.

Primarily the player and the club, in different ways — and the agent's exposure is reputational rather than direct. The club faces PAYE and National Insurance it should have operated, plus interest and potentially penalties. The player faces additional personal tax. An agent who recommended the structure without qualified advice will not be liable for the tax, but will have advised a client into a loss. This is why Q23 in Part 1 matters.

Sports Club plc and others v CIR (SpC253, [2000] STC (SCD) 443) is the foundation. The Special Commissioners held that promotional and consultancy agreements had independent value: the players had similar agreements with other organisations, and third parties were demonstrably willing to pay to use their images. Consideration genuinely paid for image rights, rather than for personal services, was therefore not employment income (HMRC CG68460).

Less than it is often given. It was a Special Commissioners decision published anonymously and did not progress to a higher court (LawInSport). It established a principle — that genuine image rights payments are not automatically employment income — but it is not binding authority of the kind an adviser can rely on to validate a weak structure. Two decades of HMRC activity since have narrowed it considerably.

Because the structures that reach tribunal usually lack commercial substance, and tribunals look at substance rather than form. In Hull City, the club had no "experience, resources or ability to exploit the commercial opportunities" of the player's overseas image rights and never took any steps to do so. The payments were made to induce the player to sign and extend his playing contract — so they were rewards for services. HMRC did not need to prove a sham (Devereux Chambers).

Substantial and sustained. In the year ended 31 March 2024, HMRC recovered £67.5m in additional tax from the football sector and issued enquiry notices to 20 clubs, 83 players and 21 agents. Since the programme began in 2015, clubs, players and agents have been required to pay around £888m (Tax Journal). Note that agents are themselves a category under enquiry, not merely bystanders.

It exposed how routinely image rights arrangements were used to move income offshore and how thin the commercial substance often was — prompting investigations across several European jurisdictions, most prominently in Spain. Its lasting effect on this topic is less legal than practical: it removed the assumption of confidentiality. Arrangements are now drafted on the assumption they may one day be read by someone other than the parties.

The tribunal record is mostly senior players, because those are the arrangements large enough to litigate. The instructive pattern for a young player's agent is the structural one: in every losing case the failure was the same — a payment with no valuation, no third-party interest, and no evidence the club exploited what it bought. A modest player with a poorly evidenced structure faces the same analysis, with far less capacity to absorb the outcome.

The playing contract and the image rights agreement can diverge sharply here, and the divergence is rarely in the player's favour by accident. A player unable to play may also be unable to fulfil appearance obligations, giving the club grounds to withhold image rights payments even while salary continues. Ask what happens to the image rights component during long-term injury, and get the answer in writing.

It should be addressed expressly, and frequently is not. An image rights agreement with a selling club does not automatically transfer to a buying club: it typically terminates or is bought out, and a new agreement is negotiated at the new club. Where the agreement has a longer term than the playing contract, or survives it, the player can be left licensing their image to a club they no longer play for.