Premiership footballers are hoping to avoid the new 50p income tax rate by asking clubs to pay their salaries as interest free loans. This would allow top players to pay as little as 2.5 per cent tax on some of their earnings. HM Revenue and Customes treat loans as a ‘benefit in kind’ and taxes only 5 per cent of the amount borrowed. If a future Conservative government cut the top rate of income tax back to 40 per cent, a club could write off the loan and it would be treated as income with the player ending up paying a rate of tax equivalent to 42.5 per cent instead of 50 per cent.
Premiership footballers are hoping to avoid the new 50p income tax rate by asking clubs to pay their salaries as interest free loans. This would allow top players to pay as little as 2.5 per cent tax on some of their earnings. HM Revenue and Customes treat loans as a ‘benefit in kind’ and taxes only 5 per cent of the amount borrowed. If a future Conservative government cut the top rate of income tax back to 40 per cent, a club could write off the loan and it would be treated as income with the player ending up paying a rate of tax equivalent to 42.5 per cent instead of 50 per cent. Another scheme favoured by footballers including Wayne Rooney and Steven Gerrard has been to put money into film partnerships which allow wealthy investors to defer income tax and capital gains tax. The government, however, has watered down the tax breaks available in recent years.