tax image

London 2012: Tax free talent


Posted by on

Summary: Payments to foreign competitors performing in the London 2012 Olympic Games and Paralympic Games will not be subject to UK tax provided they fall within the terms of a special exemption. This includes payments under sponsorship or endorsement contracts. Where the exemption applies the obligation to withhold UK income tax on payments to non-UK resident sportspersons is also lifted.

Ordinary tax treatment of athletes

Non-UK resident sportsmen and women who perform in a sporting event in the UK are generally liable to UK income tax on any income they earn that is related to that performance. This includes any payment for the performance itself, but also sponsorship or endorsement income, and payments for other activities related to the performance, like interviews and television appearances. If you are making any such payments to non-resident sportspersons you are obliged to withhold UK income tax from the payments.

Following a House of Lords decision in 2006, it is clear that this is the case even where the payments are made to the non-resident by a foreign company with no trading presence in the UK. That case related to payments made by Nike and Head to Andre Agassi in connection (in part) with performances at Wimbledon.

The House of Lords held that the fact that Nike and Head were foreign companies was irrelevant; they were still under a statutory obligation to deduct UK income tax from the payments to Andre Agassi. Further, payments to a foreign company controlled by a non-resident sportsperson are treated as payments to the sportsperson, since it would otherwise be relatively straightforward to circumvent the tax rules.

Exemption during London 2012

The normal rules are being suspended for a period covering London 2012. A special exemption from UK income tax applies to payments to sportsperson for performing at the Games as follows:

  • Any payments (or other rewards) received by an Olympic or Paralympic competitor which specifically relate to their performance in London 2012, or are for activities carried out to promote the Games, will be exempt from UK income tax. This includes not just payments for their performance at London 2012 but, for example, payments for trackside interviews or commentating on the Games (where there is no element of commercial product endorsement).
  • If a contract includes a reward for the competitor specifically for their performance in the Games, perhaps for winning a medal, that payment will be exempt. If a competitor has a contract which rewards him or her for competing generally or has an endorsement or sponsorship deal which is not directly linked to London 2012, any payment under the contract or deal which would normally be chargeable to UK tax will be pro-rated excluding the days of performance at the Games.
  • The obligation on the payer to withhold tax from payments to non-resident competitors is also lifted during the specified period for payments covered by the exemption.
  • The exemption only applies to payments earned between 30 March 2012 and 8 November 2012 under contracts entered into before 25 July (for an Olympic sporting event) or 29 August (for a Paralympic sporting event).
  • Any payments that a competitor receives for performing in London 2012 (or related activities) may of course be subject to tax in his or her home country.

BLP Perspective


When Jesse Owens returned to the US to take up commercial sponsorship deals after winning gold for his country in 1936, he was banned from amateur competitions and never represented his country again. Attitudes have changed since then, and whilst Olympians do not generally get paid to represent their country in the Games, it is accepted that individuals competing at the highest level in their chosen sport will receive, in some cases substantial, payments under sponsorship or endorsement deals.

Competing at the highest level in any sport takes an enormous amount of work and often involves a substantial financial outlay, so the exemption from UK income tax for payments related to performing at London 2012 is welcome. Businesses with endorsement or sponsorship deals with top sportspersons will need to carefully calculate any amounts they intend to pay gross and keep full records justifying those calculations.

Stay informed

Sign up to receive email alerts from our award winning Expert Insights team

Sign up now

See more insights by category

This site uses cookies to help us manage and improve the website, your browsing experience, and the material/information we send to our subscribers. For further information about cookies, including how to change your browser settings to no longer accept cookies, please view our Privacy Notice. Otherwise we will assume you are OK to continue.