Premiership clubs are braced for a wave of pay demands from star players in anticipation of the new 50p tax rate on higher earners. Figures from HSBC Private Bank and tax experts Saffery Champness suggest that, if most Premiership players are in the £50,000-£70,000 a week bracket, players at the top end of the range face a £330,000 increase in their tax bills to £1.7m from next year. Manchester United’s Christiano Ronaldo is reputedly paid £125,000 a week.
Premiership clubs are braced for a wave of pay demands from star players in anticipation of the new 50p tax rate on higher earners. Figures from HSBC Private Bank and tax experts Saffery Champness suggest that, if most Premiership players are in the £50,000-£70,000 a week bracket, players at the top end of the range face a £330,000 increase in their tax bills to £1.7m from next year. Manchester United’s Christiano Ronaldo is reputedly paid £125,000 a week. If that is the case, he would face a 19 per cent increase on his tax bill under the new rate, equivalent to an extra £670,000 a year. An insider at one top club said the implications were a higher wage bill or a reduction in the ability to attract top talent, or both. Arsenal manager Arsene Wenger warned last month that the new tax rate and sterling’s decline would be ‘a financial problem for all the English clubs.’
Clubs say they expect agents and players to demand that clubs pay salaries net of the increases. The Premiership said that the payment of salaries net of tax was a common practice. Clubs fear that the more favourable tax rates in continental Europe could undermine the Premiership’s appeal, despite a sizeable gap in salary levels. In Spain, under the so-called Beckham law introduced in 2005 to attract wealthy foreigners to work there, expatriates playing in La Liga for up to six years pay only 25 per cent tax. Germany has a top rate of 45 per cent, while Italy’s is 43 per cent and France 40 per cent.
A common way for football clubs to get around high rates of income tax is to divert part of a player’s salary into a company that promotes his image rights. These organisations are used to manage a sportsman’s income from sponsorship, merchandising and other ancillary earnings. For players based in Britain, some of these companies are located in the UK, while overseas players will base their companies in low-tax offshore jurisdictions or their place of birth. ‘You usually structure the deal so that the value of your overseas image stays offshore,’ said David Lemon, a partner at Saffery Lampness. Despite a landmark sports image rights ruling in 2000 against Revenue and Custons, tax officials continue to probe their use. Dave Whelan, chairman of Wigan Athletic, stated that Revenue officials have been pursuing several of the smaller Premiership clubs over image rights deals including his own club.
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