Football clubs and players have been warned of looming changes unveiled in the Budget that will see image rights taxed like wages.

Chancellor John Healey’s Budget document, released on Wednesday, stated that “the government will clarify that image rights payments related to an employment are taxable as employment income and taxed in the same way as wages”, adding that “to provide affected sectors with additional time to adjust to this change, the measure will now take effect from 6 April 2028”.

These changes were announced under former Chancellor Rachel Reeves but have been delayed for a year. It could see clubs forced to pay additional National Insurance for their players, and is set to impact player income outside of their club wages.

Tom Wilson, Head of Sport at HaysMac, said: “Football (and other sports) have been given another year to adapt to changes in the tax treatment of image rights, but this is a delay, not a change in direction.

“The big question is where a player’s job ends and their personal brand begins. For the biggest names in football, that brand can be worth millions in its own right through sponsorships, endorsements and other commercial deals. Drawing a clean line between the two isn’t always easy.”

Image rights to slap tax hikes on players?

Image rights relate to the use of a player’s IP – including image, likeness and voice – and its value. Cole Palmer recently trademarked his “Cold Palmer” goal celebration, while players can earn cash outside of their usual income streams at clubs by using their image for commercial purposes.

There is no set valuation to a person’s image rights, and it is subjective whether the amount paid for access to IP is accurate or inflated in any given case. 

Added Wilson: “Genuine image rights arrangements aren’t going away, but clubs will need to be able to demonstrate the commercial substance behind them. Clear contracts, robust valuations and evidence that the player’s image is genuinely being exploited commercially will become even more important.

“There’s a cost angle for clubs too. If payments are treated as employment income, employer National Insurance comes into play, so this isn’t simply about the player’s tax bill.

“April 2028 might feel a long way off, but clubs shouldn’t stand still. This is the opportunity to review existing arrangements and get ahead of the change. Ultimately, the crucial detail will be how widely the Government defines payments ‘related to an employment’.”

The image rights changes will be introduced through the Finance Bill legislation in the House of Commons.