ICAS response - Tax Treatment of Income from Sporting Testimonials
ICAS response to the HMRC consultation document 'Tax Treatment of Income from Sporting Testimonials – Proposals for Legislation'
ICAS Response - Tax Treatment of Income from Sporting Testimonials
HMRC announced last year that it intends to replace its existing guidance on the tax and NICs treatment of sporting testimonials with more comprehensive guidance that "accurately reflects the current statutory position".
Whilst HMRC states that the new guidance will not in itself bring about a statutory change in the treatment of sporting testimonials it goes on to say that "due to the current lack of clarity, the change is likely to result in more payments being treated as taxable and liable to Class 1 NICs."
In order to mitigate the impact of the change the consultation document proposes the introduction of a partial exemption or de minimis amount for sporting testimonials which is not subject to tax or NICs.
ICAS agrees that the introduction of such an exemption would be helpful in protecting those for whom the taxation of testimonial proceeds would have a disproportionate effect, especially lower-paid sportspeople and those whose careers have been ended by injury.
ICAS is however concerned that the change in the guidance will cause considerable confusion and lack of certainty for organisers of testimonials and recipients of the payments. The introduction of an exemption will help to provide certainty for payments below the threshold but not for other payments. ICAS would therefore like to see draft new guidance published for comment and discussion with sporting bodies as soon as possible.