Expert Column

Roger Gadd and Joe Grimes, KPMG UK, on \"How Footballers are taxed in the UK\"
How Footballers are taxed in the UK

1.1          Employment income

Football players are treated as employees of their football clubs.  As a result, UK income tax and National Insurance is deducted at source on the salary (and bonuses) paid to them by their club. 

Broadly, income tax rates for high earning footballers in the UK are currently as follows for a tax year:

£0 - £31,865                  20%

£31,865 - £150,000        40%

£150,000 +                    45%

The UK tax year runs from 6th April to the following 5th April.

Sufficient income tax should be deducted at source but players are required to complete annual UK tax returns and any balancing payment of tax due is then paid on the 31st January following the end of the tax year.

Additionally, UK National Insurance Contributions are usually payable by the player on the following annual amounts.

£5,715 - £40,040            12%

£40,040 +                        2%

Again, these amounts should be deducted at source by the club.

1.2          Image Rights

Image rights income is generated by an individual from licensing out their image for example use of their image for advertising, shirt sales or a match day programme.  Some players assign their image right to another entity including a company rather than being taxed personally.  This may defer tax until after they have retired from football.

These arrangements vary in complexity and are often challenged by the UK authorities.

1.3          Taxable Benefits

In most cases, footballers are given benefits from their employer as well as a salary.  Common examples of this include the use of a car, a home and private medical cover.

Players are subject to income tax on the value of the benefit they receive.  The tax can be deducted for the taxable amount by their employer when paying the player’s salary.  However, it is possible that the additional due on the benefits is not collected in this manner and six monthly payments need to be made to the UK tax authorities.

A current topical issue for footballers is that the UK tax authorities are seeking to tax fees paid by their club to their agent as an employment benefit on the player.  This can lead to sizeable and unexpected tax liabilities for players.

1.4          Residence & Domicile

Players who are tax resident and domiciled in the UK are taxable in the UK on their worldwide income and gains as it arises.

It is increasingly common for footballers with a domicile outside of the UK to play professional football in the UK.  Special rules apply to such individuals who may be able to claim to only be taxed on their UK source income and gains whilst resident in the UK.  The rules are complex and players should obtain advice to ensure that assets are held efficiently and that compliance obligations are met.

Players who arrive or leave the UK part-way through a tax year are ordinarily taxable on their worldwide income and gains for that entire tax year.  It is often possible for the player to claim for ‘split-year’ treatment and only be taxable in the UK for part of that tax year but careful considerations and elections will be required.

1.5          Other tax issues

The tax affairs of footballers in the UK are frequently enquired into by HM Revenue & Customs.  It is therefore important to ensure that the player is compliant with UK tax legislation.

The wealth of many footballers often means that they make investments in property and financial markets.  Each type of investment has its own tax treatment and reporting obligations and may need to be included within their personal tax returns.

1.6          KPMG in the UK
roger_reduced_400_02joe_reduced_400_01KPMG in the UK have an experienced team who act as personal tax advisers for professional sportspeople and coaches as well as acting as advisers for professional sports clubs.

* This article has been co-authored by Roger Gadd (Director) and Joe Grimes (Assistant Manager) working with KPMG UK