Premier League clubs are facing the prospect of higher wage bills after the government’s announcement in the budget that image rights payments will be treated as income from April 2027.
The change will leave many top-flight players with significantly larger tax bills and several agents have said that is likely to be passed on to clubs, particularly for players who sign new contracts before the measure takes effect.
Many players receive image rights paid to limited companies for commercial earnings, such as sponsorship deals and advertising income. From April 2027 these will be subject to the 45% top rate of income tax, rather than the corporate tax rate of 25%.
Some Premier League players signed from overseas are understood to have clauses in their contracts that make their clubs liable for any significant changes to the UK’s tax regime but those who do not are likely to demand higher wages.
Many players negotiate contracts based on net pay, with clubs taking care of their tax affairs, a trend likely to continue. Image rights payments often make up a notable portion of players’ salaries, which is permitted by HMRC if the amount is deemed commercially realistic and does not exceed 20% of total earnings, so the increased tax liability for clubs may be considerable.
The government’s move follows a long-running clampdown by HMRC on footballers’ earnings, which has recovered hundreds of millions of pounds in unpaid tax.
Prof Rob Wilson, head of finance, accounting and business systems at Sheffield Hallam University, said: “With these changes, the government is ensuring remuneration reflects fair taxation, and giving a clearer picture of the wage bills driving financial sustainability debates in English football. There will be some short-term pain as clubs adjust, but in the long run this promotes greater integrity, accountability and confidence in the economics of the game.”
