As a professional rugby player, sponsorships could be an important part of your income. Earnings from sponsorship deals supplement your wages and may give you more opportunities to build financial stability now, while also saving for the future.
To make the most of your earnings, it is important to consider the tax you might pay, and how you could potentially mitigate a large bill. You might also focus on finding tax-efficient ways to save and invest your income so you can build wealth for the future.
Read on to learn three ways to maximise sponsorship earnings tax-efficiently.
1. Consider receiving sponsorships through a limited company
The tax you pay on your sponsorship earnings depends on several factors, including whether you receive the income personally or if it is paid to a business in your name.
You may decide to register as a sole trader and receive sponsorship income directly. In this case, sponsorship payments will be included with the rest of your earnings and subject to Income Tax.
This means that, in the 2025/26 tax year, you will pay the:
- Basic rate of 20% on earnings between £12,570 and £50,270
- Higher rate of 40% on earnings between £50,271 and £125,140
- Additional rate of 45% on earnings that exceed £125,140.
However, many athletes choose to set up a limited company and receive their sponsorship earnings through the business instead. This could have certain benefits, as you pay Corporation Tax instead of Income Tax.
This would mean you pay the:
- Small profits rate of 19% if the business earns less than £50,000
- Standard rate of 25% if the business earns more than £250,000.
If the business earns between £50,000 and £250,000, you will likely pay some Corporation Tax, and this is calculated on a sliding scale.
As such, depending on your earnings and the tax bracket you are in, your Corporation Tax bill could be lower than the Income Tax you would have paid if you received sponsorship payments directly.
By managing sponsorships through a business, you may create more opportunities for tax planning and could reduce your overall tax liability. To achieve this, it is important to consider how you draw an income from the business.
2. Draw a tax-efficient income from your business
Setting up a business could help you make savings because you pay Corporation Tax rather than Income Tax. Yet, you will likely pay some tax when extracting wealth from the business, too.
For example, if you take a salary, you will pay Income Tax on any earnings that exceed your Personal Allowance of £12,570 in 2025/26. This will be added to the wages you earn from rugby, too.
If you have already paid Corporation Tax on this wealth, your overall bill could be larger than it would have been if you received sponsorship income directly as a sole trader. Fortunately, there are ways to improve tax efficiency in your business.
First, you may be able to claim certain tax-deductible expenses, such as travel or business administration costs. This could reduce your taxable income, so you pay less Corporation Tax.
Also, when extracting wealth from the business, you might consider paying yourself dividends, which are a portion of the profits paid to shareholders. You may pay some tax on your dividends, but this is typically charged at a lower rate than Income Tax.
In 2025/26, the first £500 of dividend income is tax-free. This is your “Dividend Allowance”. If you have already used your Personal Allowance for the year, any dividends that exceed the Dividend Allowance are taxed at:
- 8.75% if you are a basic-rate taxpayer
- 33.75% if you are a higher-rate taxpayer
- 39.35% if you are an additional-rate taxpayer.
As a result, taking dividends from the business could be more tax-efficient than receiving a salary, in some cases.
The most tax-efficient method for extracting wealth from a business depends on your individual circumstances. A combination of salary and dividends could be the most suitable option.
We will work with you to explore ways to potentially reduce the tax you pay on income from sponsorship deals.
3. Use tax wrappers to save and invest for the future
While you are playing professional rugby and receiving an income from sponsorship deals at the same time, your earning potential may be high. Yet, you could see a significant change to your income when you retire from playing.
That is why you may want to save and invest some of your sponsorship income now, so you can build wealth to fund your lifestyle in the future.
If you plan to save or invest, you may need to consider the tax you could pay on the growth you benefit from.
Fortunately, you can contribute £20,000 across all your ISAs in 2025/26, and this allowance resets each year. If you save in a Cash ISA, you will not pay Income Tax on any interest that you generate. Similarly, if you invest through a Stocks and Shares ISA, there is no Capital Gains Tax (CGT) or Dividend Tax to pay on your returns.
Using as much of your ISA allowance as possible each year could help you generate more tax-efficient growth and maximise your sponsorship earnings.
Pensions could also be a useful tax wrapper, as there is no Income Tax, CGT, or Dividend Tax to pay on returns from investments in a pension. You also receive tax relief from the government on your contributions.
We can help you make use of these tax wrappers to invest your sponsorship earnings and work towards your long-term financial aims.
Get in touch
If you are concerned about the tax you could pay on sponsorship earnings, please do get in touch with us at DBL Asset Management.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.