International performers and UK income tax

Non-UK resident entertainers and sportspeople who perform or compete in the UK need to be aware of special tax rules.

The special rules include having tax withheld from payments made for appearances in the UK and paying UK tax on a proportion of worldwide income earned in connection with those appearances.

Withholding tax for non-resident performers and athletes

When a non-UK resident entertainer or sportsperson is paid for an appearance in the UK the payer must usually deduct income tax at the basic rate (20%) from the payment where the total payments for the year are more than the personal allowance (£12,570). This withholding also applies to payments made to third parties in connection with a performance, such as payments made to image rights companies or personal service/loan-out companies. The tax withheld is paid to HM Revenue & Customs (HMRC) as a payment towards the performer’s final UK tax bill for the year. The withholding tax rules don’t apply to payments made by a person or organisation on HMRC’s list of approved payers in the middleman scheme.

A non-UK resident entertainer or sportsperson may be able to ask HMRC for a reduced rate of withholding tax to apply, so that the tax deducted is closer to their expected final UK tax bill. Any application must be made at least 30 days before the person is due to receive payment for their appearance.

How much tax do foreign performers pay in the UK?

If a non-UK resident performer’s net profits are more than the personal allowance and basic rate band in a tax year (ie are more than about £50,000), it is likely that they will need to pay more tax than has been withheld and the performer must then register for self-assessment and file a UK tax return. Via their tax return, the person will be subject to income tax at the graduated rates (20/40/45%) after deducting allowable business expenses.

Sometimes the level of deductible expenses (including travel, accommodation, coaching etc) might mean that the person can get a refund of the withholding taxes deducted at source.

Most countries only tax the income directly related to the local performance, such as prize money and appearance fees. The UK however also seeks to apportion part of an athlete’s global endorsement income to their UK performances, and collect UK tax on the UK-related proportion of this income.

How is UK income calculated for non-UK resident sportspeople?

All prize money from UK performances is subject to UK tax, as are UK appearance fees and bonuses paid by sponsors which specifically relate to UK tournaments (eg winning Wimbledon).

Endorsement retainers are also subject to UK tax, but as these are paid annually and are not typically country specific, they must be apportioned to the UK.

HMRC suggests one of two methods to calculate this UK apportionment – the Relevant Performance Days (RPD) method or the Relevant Performance and Training Days (RPTD) method.

A performance day involves any public performance, whether in competition or training. A training day includes three or more hours of physical activity training towards the chosen sport and which the public aren’t invited to watch, such as gym workouts, road running, or sport-specific practice.

The apportionment calculation will use one of the above methods to work out the number of UK days over the number of worldwide days of which the total worldwide endorsement income will be multiplied by.

Endorsement Income x UK Days / Worldwide Days = UK taxable income

For example, if an athlete spends 100 days of the year performing their sport in competition, of which 10 are spent performing in the UK, under RPD 10% of their worldwide endorsement income would be subject to UK tax. If however the total number of performance and training days was 300 and only five extra days were spent training in the UK, then the RPTD fraction of 15/300 would mean that only 5% of the athlete’s worldwide endorsement income would be subject to tax in the UK.

The sportsperson can choose which method to use each year but, given that a non-resident athlete is likely to spend most of their time training outside the UK, the RPTD method is usually the best option. An accurate diary should be kept as HMRC regularly asks to see evidence of worldwide training days.

Criticism of the UK approach to taxing athletes

The UK government’s decision to tax endorsement income has been criticised as deterring athletes from competing in the UK.

One of the most extreme examples is golf, as a player will typically not receive any prize money if they don’t make the cut but can still be taxed on a proportion of their worldwide endorsement income just for playing the first two days of a competition.

Similarly, a singles player knocked out of Wimbledon in the first round will receive about £60,000 in prize money but could still end up going home with a net loss if they have considerable global endorsement income – as illustrated in the following example:

In this scenario the UK income tax is almost all of the UK prize money and after expenses creates an effective tax rate of 125% against the net cash profit. This means that the athlete goes home £11,000 financially worse off than when they arrived.

The UK tax can sometimes be offset against local taxes in the athlete’s home country, but for those who live in low tax jurisdictions this might not be possible or might lead to a significant waste of foreign tax credits.

Professional golfers from outside the UK will often only come to the UK to play in ‘big money’ events such as The Open or the LIV golf series which guarantees a financial return. This means that other tournaments can’t attract the best talent.

Likewise, several tennis players choose not to play at Queens, Eastbourne, Nottingham or Birmingham, instead playing in grass court competitions outside the UK in the lead up to Wimbledon. Rafael Nadal has openly said that he wouldn’t play at the prestigious Queens tournament because of the tax implications, while Roger Federer always played at Halle, Germany, where the tax rate is only 15.825% compared to the UK’s 45% additional rate of tax.

Usain Bolt was famously upfront about his decision not to race in the UK as often as he would have liked because he would have been hit with a huge UK tax bill, many times bigger than any appearance fee. For somebody in his position who might have only performed a handful of times a year, he could have seen almost a quarter of his c.$10m Puma deal at risk of UK tax just for competing in the UK for two or three days in a year. This has since been relaxed slightly with the introduction of the training days basis of apportionment, but this still has a big impact on top level athletes and the decisions they make on where to compete.

Tax exemptions for athletes

As part of the bidding process to host a Summer Olympic Games, the International Olympic Committee (IOC) insists that the host country provides a full exemption from income taxes for performances by the athletes and services provided by others in the relevant country throughout the competition.

In line with this, a special exemption was introduced for the 2012 London Olympic and Paralympic Games, relieving income earned by the athletes from income tax or corporation tax in connection with the games. A similar exemption applies in connection with the World Athletics Indoor Championships held in Glasgow in March 2024 and the UEFA Champions League Final at Wembley Stadium in June 2024 . These exemptions are not, however, handed out automatically.

In the future, it is likely that the UK will need to continue offering similar exemptions if it is to be successful at bidding for major one-off tournaments, in particular those related to football and athletics. However, it seems unlikely that competitors at Wimbledon or The Open will be receiving similar relief anytime soon.

Tax rules for athletes around the world

The US and France both request that withholding taxes are paid and tax returns filed including a proportion of worldwide endorsement income.

As fast as Emma Raducanu’s $2.5million cheque was handed to her for winning the 2021 US Open, it was swiftly taken away again. This was most likely for security reasons but also possibly because the Internal Revenue Service (IRS) would have been itching to withhold their 30% federal taxes from that amount at source.

Some countries insist that withholding tax is applied to prize money and directly attributed performance income, but don’t require a tax return to be filed or additional payments to be made personally by the individual.

How we can help

Our Sports & Entertainment Practice Group offers a full range of compliance and advisory services to both corporate clients and private individuals. This includes advising on the UK tax implications of performers visiting the UK, including the administration of withholding taxes, applying for a reduced rate of withholding tax and calculating UK income tax.

With our acquisition of AWFM Sport in August 2024 and our international reach through our Nexia partnership we are ideally placed to help sportspeople and entertainers deal with complex and globalised tax, accounting and business management issues.

This briefing note is not comprehensive and we recommend getting professional advice, based on your particular circumstances, before taking any action with regard to UK tax on international performers or tax matters generally.

To find out more, please get in touch with your usual Saffery contact, or talk to Pete Hackleton or James Taylor.