The lavish lifestyles led by some of our wealthiest sports stars make their incomes an interesting topic to discuss. Many footballers have to contend with hefty taxes on their incomes, but do they get any special leeway when it comes to making tax payments?
The amount of tax that a footballer pays depends on their salary, as well as other factors such as having property or trusts. In the UK, wealthy footballers’ rate of taxation is 45%, with an additional 2% for those who make more than £150k per year.
In this blog post, we’ll take a look at how much UK footballers are expected – or not expected – to pay out as part of their income tax obligations. By understanding these payment mechanisms, we can gain a better appreciation for the unique financial circumstances facing modern-day players.
How much tax do footballers pay in the UK?
Football, one of the most popular sports in the United Kingdom, has a large and passionate fan base, as well as a significant financial impact. The sport’s high wages have made it notorious for paying high taxes and professional footballers are considered some of the wealthiest people in Britain. In a world where money appears to be no object for footballers, it’s easy to assume that they pay very little in terms of paying taxes. With transfer fees negotiated in the millions, there are numerous taxes due on their income both in the UK and abroad. Many of these incomes are often met with criticism from football fans who want to make sure these sports stars pay enough of ‘their fair share’.
Footballers in the UK have to pay both Income Tax and National Insurance Contributions on any income. Furthermore, they may also need to submit Self Assessment returns every year for extra brand deals and endorsements, meaning any untaxed or undisclosed income will be subject to additional penalties. To many footballers and fans alike, it is important to be aware of how much tax players must pay because it contributes significantly to the UK economy.
How are footballer’s earnings taxed in the UK?
In the UK, footballers’ earnings are subject to different tax restrictions depending on the player’s nationality and residence. Non-UK-based players may either be treated as temporary non-residents for tax purposes, in which case their UK earnings are taxed at a flat rate of 20%, or as non-domiciled individuals meaning they pay no UK taxes on overseas income but are liable for some domestic charges. British citizens and those living in Britain face much heftier taxes on their wages; these are typically calculated based on the individual’s annual salary and also include any money from image rights and other endorsements. Despite this, footballers in the UK remain among the highest-paid professional athletes due to the country’s expansive media coverage and lucrative sponsorships
Are premier league footballers’ high incomes good for the UK economy?
The debate over whether high salaries in the English Premier League (EPL) are good for the UK economy has been raging for years. On one hand, it can be argued that such incomes only benefit players and don’t trickle down to the rest of the economy. Supporters of this view point out that these wages could instead be invested into businesses, creating jobs and boosting productivity. On the other hand, some believe that having high earners in British football brings increased exposure internationally which can help attract investment to the country and promote tourism. Furthermore, they argue that when taken as a whole, EPL salaries raise consumer spending and give a huge boost to sports-related industries.
Admittedly, their enormous salaries may seem excessive to those earning typical wages, but the money they bring into the country can benefit the economy regarding taxation. Paid on all incomes including sponsorship deals and television shares, these taxes inject substantial amounts of money directly into our economy. At a base level, it keeps local businesses thriving which can help sustain jobs that are sometimes unnoticed or taken for granted and at a higher level generates an increasingly important tourism industry life-blood around stadiums throughout England.
Taxes are a necessary and important element for keeping the UK economy healthy, allowing funds to be allocated to important projects such as infrastructure, public services, health care, welfare provision and security. By providing funding through taxation, the government can support employment, innovation and growth within the UK’s economy. Direct or indirect taxes generated from premier league footballers and their clubs all contribute to the efficient functioning of the UK’s economy.
It is clear that both sides of the argument have strong points to make, but without more research, it will be hard to definitively answer this complex economic question.
Are footballers exempt from tax in the UK?
It’s a question that tends to spark debate, particularly amongst football fans. The answer is, unfortunately, not simple. English players who play in other countries overseas may benefit from double taxation relief of the profits earned from their image rights. However, the globalisation of the Premier League has seen foreign-born players become commonplace. These individuals will be subject to different rules and regulations than UK-born citizens when it comes to employment taxes. For instance, some international players may only have to pay 50% of what a domestic player would owe. For HMRC however, transparency continues to be key along with compliance from all organizations and individuals regarding paying any applicable taxes.
How much do premier league footballers earn after tax in the UK?
A recent study showed that Premier League footballers’ average take-home salary after tax in the UK is an impressive £2.3 million per year, which is considerably higher than other professionals in high-end positions with equivalent experience and qualifications. Even more impressive is the fact that these earnings are generated largely through endorsement deals, meaning Premier League footballers can draw in income alongside the contract that they have with their club. Regardless, this amount of money goes a long way towards highlighting just how much being a professional football player can be worth – precisely proving why it’s so sought after by aspiring athletes everywhere.
How much tax do premier league football clubs pay in the UK?
Investors in the UK Premier League may be surprised to learn that their football clubs are subject to significant tax on their profits, with most clubs paying 28% corporation tax in a financial year. Although the majority of clubs pay this standard rate, some clubs such as Manchester United have been approved for a reduced rate of 25%. This is still well above the current UK Corporation Tax rate of 19%, highlighting just how much revenue they generate in a single year.
Football clubs in the English Premier League are some of the highest-earning teams sports organizations in the world. It’s not uncommon for premier league clubs to clear over $1.6 billion dollars per year in revenue from ticket sales, broadcasting rights, sponsorships, and merchandise. With wages paid out to star players sometimes reaching upwards of $300 million per team, it is no surprise that premier league clubs also pay a hefty tax bill.
Often the profit made is reinvested into the club’s infrastructure and facilities, making sure its supporters enjoy an excellent game day experience.
Are all premier league footballers on a high salary?
Different players will have different levels of pay depending on their experience, reputation and influence within the team. Some players could be making millions every year while others may only receive thousands every week. The teams within the Premier League vary greatly in terms of budget, but there are also distinctions between top stars such as Messi or Ronaldo and other impressive footballers within the same team.
Footballers at the lower end of the Premier League typically earn far less than the superstars and international stars at the top end. However, their salaries are still very respectable when compared to those of other professions. The basic salary for a lower-end Premier League footballer usually starts at around £2,000 per week with performance bonuses potentially adding a further £10,000 on top of that amount. In addition, many footballers can also receive additional income from sponsorship deals and endorsements which can significantly boost their annual income. Consequently, a professional footballer playing in one of England’s top leagues can expect to enjoy an incredibly comfortable financial lifestyle despite not necessarily being considered among the elite stars in the game.
As always, please remember I am an Accountant, but not your Accountant. In this post (and all of my others) I share information and oftentimes give anecdotes about what has worked well for me. However, I do not know your personal financial situation and so do not offer individual financial advice. If you are unsure of a particular financial subject, please hire a qualified financial advisor to guide you.
This article has been written by Luke Girling, ACA – a qualified Accountant and personal finance enthusiast in the UK. Please visit my ‘About‘ page for more information. To verify my ACA credentials – please search for my name at the ICAEW member finder. To get in touch with questions or ideas for future posts, please comment below or contact me here.
