Crackdown on 'image rights' tax loophole

Tax investigators are cracking down on attempts to avoid the new 50p top rate of income tax by reclassifying salary as payments for "image rights", HM Revenue and Customs has confirmed.

The issue came to light as it was reported that a number of prominent Premier League footballers had taken advantage of the little-known provision to save millions of pounds in tax.

More than 50 players are thought to be making a tax saving of 22 per cent by having a proportion of their salary paid through image rights companies, which are liable to corporation tax at 28 per cent rather than income tax at 50 per cent.

And in some cases, it was claimed that players are paying as little as 2 per cent tax by taking money from the image rights companies as loans, which are classed as benefits in kind.

Payments for image rights can be made to people whose physical appearance and name have a commercial value in their own right.

Footballers could earn image rights payments for the use of their pictures on merchandise or their names on replica shirts.