Premier League clubs are bracing for increased wage bills following the government's budget announcement that image rights payments will be treated as income from April 2027. The change will subject many top-flight players to significantly larger tax bills, with agents warning that the additional costs are likely to be passed on to clubs, particularly for those signing new contracts before the measure takes effect.
Currently, many players receive image rights payments through limited companies for commercial earnings such as sponsorship and advertising. From April 2027, these payments will be taxed at the 45% top rate of income tax instead of the corporate tax rate of 25%. Some overseas players have clauses in their contracts making clubs liable for significant tax regime changes, while others without such clauses are expected to demand higher wages.
Contracts are often negotiated on a net pay basis, with clubs handling tax affairs, a trend likely to continue. Image rights payments can constitute a notable portion of salaries, permitted by HMRC if commercially realistic and not exceeding 20% of total earnings. The increased tax liability could therefore be considerable for clubs.
The government's move follows a long-standing HMRC clampdown on footballers' earnings, which has recovered hundreds of millions in unpaid tax. Prof Rob Wilson of Sheffield Hallam University said the changes ensure fair taxation and provide clearer wage bill data for financial sustainability debates, adding that while short-term pain is expected, long-term integrity and confidence in the game's economics will improve.
