Income Tax (Earnings and Pensions) Act 2003 section 306B

Limited exemption for sporting testimonial payments

Section 306B provides a limited income tax exemption of up to £100,000 for payments made to a sportsperson from a sporting testimonial, subject to conditions including independent control of the testimonial and a one-off lifetime entitlement.

• Sporting testimonial payments treated as earnings are exempt from income tax up to a maximum of £100,000, provided the testimonial is controlled by an independent person unconnected with the sportsperson or their employer
• The exemption is a once-in-a-lifetime benefit — if a sportsperson has already used the exemption in relation to a previous testimonial, no further exemption is available
• Where a testimonial involves a series of events spanning more than one year, only money raised from events within the first twelve months qualifies for exemption, and any unused exempt amount can be carried forward across tax years
• If the sportsperson has died, the exemption can still apply to payments made to their personal representatives within 24 months of the date of death