Premier League clubs are bracing for higher wage bills after the government announced in the budget that image rights payments will be treated as income from April 2027. The change means many top-flight players will face significantly larger tax bills, with agents warning that the extra cost is 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 like sponsorship and advertising, taxed at the corporate rate of 25%. From April 2027, these payments will be subject to the 45% top rate of income tax, a substantial increase that could add millions to players' tax liabilities.
Some overseas players have clauses in their contracts making clubs liable for significant tax regime changes, but those without such clauses are expected to demand higher wages to compensate. Since many players negotiate contracts based on net pay, with clubs handling tax affairs, clubs may face considerable increased costs. Image rights payments are permitted by HMRC if deemed commercially realistic and do not exceed 20% of total earnings.
The move follows a long-running HMRC clampdown on footballers' earnings, which has recovered hundreds of millions in unpaid tax. Prof Rob Wilson of 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.'
