Unlike most non-UK resident individuals who work temporarily in the UK whose earnings either do not give rise to a UK income tax charge, or if they do, it is covered by treaty relief with their home country, there are special tax rules in place for foreign entertainers and sportspeople who perform in the UK.
UK Withholding Tax
HMRC require any individual or organisation that engages a foreign entertainer or sportsperson to perform in the UK to withhold 20% basic rate income tax where the gross annual payment exceeds £12,570 (UK personal allowance for the 2025-26 tax year). The withholding requirement also applies to payments made to third parties in connection with a performance, such as payments made to image rights companies or personal service/loan-out companies.
In addition, if the individual’s net profit for the tax year exceeds £50,270, then they will be required to register with HMRC for self-assessment, submit a tax return, and depending on the level of their net income (after relevant business expenses), pay higher (40%) or additional rate (45%) income tax.
UK tax relief is available for relevant business expenditure, for example, travel, accommodation and coaching costs.
Where it is clear that, due to the level of expenditure, the 20% rate of withholding tax will be excessive, the foreign entertainer or sportsperson can request for the tax to be applied to the anticipated net profit, rather than the gross fee and prize money. This application must be made to HMRC’s Foreign Entertainers Unit at least 30 days before the UK performance.
Calculation of UK income for foreign sportspeople
All UK prize money is subject to UK taxation together with appearance fees and bonuses paid by sponsors which specifically relate to UK tournaments.
Controversially, where the individual is in receipt of non-country specific endorsement retainers, the apportioned annual global endorsement income relevant to their UK performance, is subject to UK tax.
There are two possible ways to calculate the apportioned UK element of a foreign sportsperson’s global endorsement income, as follows:
- Relevant Performance Day (RPD)
- Relevant Performance and Training Days (RPTD)
A performance day involves any public performance, whether in competition or training. A training day is three or more hours of physical activity spent training toward the chosen sport and which the public are not invited to view (e.g. gym work, road running or practice).
The UK taxable element will be arrived at by using one of the above methods to work out the number of UK days over the number of worldwide days against which the annual global endorsement income is multiplied, as follows:
Annual global endorsement income x UK days / worldwide days = UK taxable income
If a sportsperson spends 110 days of the year in pursuit of their sport in competition, of which 11 are spent performing in the UK, using the RPD method 10% of their worldwide endorsement income would be subject to UK tax. If the total number of performance and training days is 280 and only five additional days were spent training in the UK, then the RPTD fraction of 16/280 would mean that 5% of the sportsperson’s worldwide endorsement income would be subject to UK tax.
The sportsperson can choose which method is most beneficial each tax year. Where the sportsperson spends the majority of their time training overseas, we would expect the RPTD method to be the most beneficial option.
We would recommend that the sportsperson keep a detailed diary tracking their movements from one jurisdiction to another as HMRC is likely to request evidence of the worldwide training days.
What Next?
Gravita has a team of experts ready to guide foreign entertainers and sportspeople through the intricacies of the UK tax system.
Please get in touch to schedule an initial call or speak with Tax Partner, Thomas Adcock.
