By Paul Tew, Consultant at Croner

HM Revenue & Customs’ (HMRC) role in the London 2012 Olympic and Paralympic Games is to protect tax revenue while supporting those legitimately involved in and benefiting from the Games with their tax requirements and obligations.


If an employer has bought tickets for the games to be used to entertain clients, then certain employees may need to be present at the event to “generate future business”. There are no special income tax rules for UK-based employees in respect of client entertainment for the Games – normal rules apply.

In other words, entertainment counts as business-related if its purpose is to talk about a particular business topic, retain an existing business relationship or start a new one. By contrast, entertainment of business acquaintances is not business-related if its purpose is social (to enjoy the sport and the spectacle of the Games), even if some discussion of business topics is undertaken during the course of the entertainment.

Employers supplying tickets and a lavish meal and/or drinks package as a reward for services rendered or in anticipation of any services forthcoming by an employee, e.g. an incentive to a sales-based workforce, are providing a taxable benefit to the relevant employee(s), which must be reported on forms P11D by 6 July following the end of tax year 2012/13, or included within the scope of the employer’s 2012/13 PAYE Settlement Agreement.

Official functions

Non-UK resident individuals (broadly defined as those in the UK specifically for the Games and not spending 183 days or more in the UK in 2012/13) temporarily in the UK to perform an official function at the 2012 Games and holding an Olympic Identity & Accreditation Card or a Paralympic Identity & Accreditation Card qualify for a temporary exemption from UK income tax on their relevant employment income.

The Card must be issued and validated by the London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) and relate to an official function. Categories of official functions include media workers (eg journalists, technicians and producers), service technicians and technical officials.

The activity must be performed in the UK during the period 30 March to 8 November 2012 to qualify for the tax exemption. Employment income earned outside the specified time period and income received for carrying out an activity other than an official function at the 2012 Olympic Games is not tax exempt. Where only one payment is received for all activities, an individual can only claim tax exemption on the part payment that relates to the exempt activity.


A UK income tax exemption also applies to those temporarily in the UK to perform in, or rehearse for, one of the Opening or Closing ceremonies at the Olympic and/or Paralympic Games. This applies to income earned from both public and closed rehearsals. Income earned by non-resident performers outside of the 2012 Games exemption remains taxable under the existing tax arrangements.

There is also a tax exemption for visiting competitors taking part in the Games covering any payment or other rewards received as a result of their performance at the Games or an activity primarily to promote the Games, or the Olympic or Paralympic movement as a whole and earned between 30 March and 8 November 2012.

Non-UK resident entertainers or sportspersons who perform work in the UK are subject to a withholding tax which should be deducted by payers; this procedure does not apply during the specified period for payments covered by the exemption. UK resident sportspersons are taxed on their worldwide income and these athletes pay UK income tax as normal.

Partner businesses

A London 2012 Partner is an organisation providing services to LOCOG in return for the right to market and advertise their products for commercial purposes by reference to their association with the Games. A non-UK resident individual employed by, or contracted to work for, a London 2012 Partner specifically for the purpose of delivering the Games does not have to pay UK income tax on income earned from carrying out those particular activities during the period 30 March to 8 November 2012.

London 2012 Partner businesses may also supply employees to act as “volunteers”. If the employee’s terms and conditions are temporarily revised to include volunteering duties, the employee receives normal basic pay and the employer can elect to reimburse the employee’s travel, accommodation and meal expenses. Tax relief may be available under the general expenses rule, where travel and subsistence expenses are incurred in the performance of the employee’s duties.

Games Makers

The organising of the 2012 Olympic Games is being supported by 70,000 volunteers (referred to as “Games Makers) who are to be given free meal vouchers, but are not being supplied with accommodation or having any travel costs reimbursed by LOCOG.

If employees have registered and been accepted as Games Makers and are intending to take paid leave to be in attendance at the Games for the required period, the employer may like to support the individuals by paying for their travel and accommodation.

Where the employer reimburses these travel and accommodation expenses, this is by virtue of their employment and not while travelling in undertaking the duties of their employment. This is a taxable benefit to the receiving employee(s) and reportable in the normal ways.

For more information on HR and payroll visit www.cronersolutions.co.uk