HMRC's Quiet Image Rights Tax Reform
HMRC’s Silent Maneuver: Image Rights Taxation Buried in Budget 2025
In the time-honoured tradition of ‘transparency,’ HMRC has once again opted for opacity. While Budget 2025’s headlines touted economic growth and investment, a significant change slipped through almost unnoticed: the tax treatment of image rights.
Contrary to any verbal statement, this pivotal reform was quietly concealed within the dense pages of the budget document. There was no ministerial fanfare, no press conference, and certainly no direct communication to the UK’s contractor community. Instead, the announcement was left to languish in print, perhaps in the hope that it would go undetected by those most affected.
What’s Actually Changing?
The government intends to legislate, via the Finance Bill 2026-27, to ‘clarify’ (read: tighten) the tax treatment of image rights:
All image rights payments related to an employment will be treated as taxable employment income.
This means such payments will be subject to both income tax and employer/employee National Insurance contributions.
The new rules are set to apply from 6 April 2027.
Because, of course, nothing signals “we have nothing to hide” quite like hiding it in plain sight.
Why Does This Matter?
For years, sports professionals, media personalities, and some contractors have used image rights arrangements to channel income in a more tax-efficient manner. By separating payment for image rights from standard salary, they could reduce their tax and National Insurance liabilities, often to the chagrin of HMRC.
With this legislative shift, those days are, for all practical purposes, numbered. The implication is straightforward:
Any payment to an employee for image rights, whether through a separate company or directly, will be taxed as if it were salary.
This closes a long-standing—and, for some, lucrative—tax planning avenue.
Who Is Affected?
Contractors in media, entertainment, and sports who have (or considered) image rights arrangements.
Employers who structure remuneration to exploit image rights advantages.
Agencies and intermediaries facilitating such schemes.
If you thought HMRC was done with its clampdown on creative tax planning, think again.
What Should Contractors Do Now?
The measure is not due to take effect until April 2027, giving affected parties a narrow window to reassess:
Review existing image rights arrangements with qualified tax advisors.
Prepare for increased tax liabilities from 2027 onwards.
Consider alternative remuneration strategies that comply with the new rules.
A table summarizing the changes:
| Aspect | Current Treatment | Post-April 2027 Treatment |
|---|---|---|
| Image Rights Income | Often outside PAYE/NIC | Treated as employment income |
| Tax/NI on Payments | Sometimes reduced | Full income tax and NI applies |
| Planning Opportunities | Some flexibility | Significantly restricted |
Quotes & Sources
A Treasury official, when pressed for comment, offered the following masterpiece of understatement: “The government is committed to ensuring fairness in the tax system.”
Tax specialist Julia Hammond observed, “The lack of verbal mention in the Budget underscores HMRC’s awareness of the controversy. This move closes a loophole, but it would have been helpful—and honest—to communicate it directly.”
The detail itself appears only in the official Budget 2025 document, page 110, chapter 4.140: “The government will legislate to clarify the tax treatment of image rights to ensure that all image rights payments related to an employment are treated as taxable employment income and subject to income tax, and employer and employee National Insurance contributions. This will be legislated for in Finance Bill 2026-27 and take effect from 6 April 2027.”
The Real Story: Why the Silence?
Perhaps HMRC hoped that by omitting any verbal mention, the change would pass unnoticed, or at least unopposed. Yet for contractors, the message could not be clearer: the government is tightening its grip, and creative tax planning is firmly in the crosshairs.
While some may see this as overdue reform, the manner of its introduction—quiet, almost furtive—only fuels suspicions about HMRC’s approach to transparency. Contractors should not wait for a formal announcement. The change is coming, whether or not the government deigns to acknowledge it publicly.
Next steps? If you have image rights arrangements, the time to act is now. Because, as HMRC has demonstrated, silence speaks volumes.
