Whether you’ve just secured your first commercial contract or are a more seasoned player, our experience shows that there a number of key financial issues that are, more often than not, overlooked. The consequence of which can have a significant impact on a players’ financial wellbeing. It may be the case that you leave your affairs to others, thinking they have everything in hand, however this may not be the case and whilst ignorance might be bliss it can also be costly. As featured in Professional Player magazine we have set out to highlight our top 10 financial issues overlooked or mis-understood by players:
Tax savings can be had from setting up an image rights company for a player’s income from his or her image rights, but it is important that these are structured correctly to avoid them being taxed as disguised emoluments.
2. Tax relief for flights for non-domiciled players
For non-domiciled players, if flights to and from their home country are paid for by the club within 5 years of the player coming to the UK, the amount is not taxable. Often though these flights are included on the player’s P11d and taxed. A claim can therefore be made to claim the tax back.
3. Tax relief for Agent fees
If a club pays for agent fees they are a taxable P11d benefit. HM Revenue & Customs will often include this benefit in a player’s tax code in the following tax years to collect tax at source from the player’s salary for the expected benefit. However, if the club only paid for the agent fees in the first year, and all subsequent years are paid by the player, the player will have paid too much tax at source and could be entitled to a tax refund.
4. Over looking expenses for relocation and accommodation
If a club pays for relocation expenses when a player moves club, the first £8,000 of expenses paid for are exempt from Income Tax and National Insurance, as long as the expenditure is qualifying and certain conditions are met.
5. Help with cost of equipment and kit
Players can obtain tax relief on the equipment and kit they purchase themselves. Whilst the amounts are only modest on their own, when you add up the potential cost of boots, training kit, gum shields, gloves, nutrition etc the savings can be worth it.
6. Help with the cost of operations
Whilst medical expenses usually aren’t an allowable expense for tax purposes due to their intrinsic duality of purpose, in some cases if it can be shown that the expenditure had a special character dictated by the occupation as a matter of physical necessity, the cost of an operation could be allowable.
7. Tax efficient planning for retirement
A pension may not be high on the list of priorities for players, but the relatively short careers of sports professionals means planning for the future is important. A registered pension is a tax efficient way to save for the future. Unregistered schemes can also provide significant advantages to players.
8. Poor record keeping
It is important that records are kept for at least 1 year after the filing date to support any claims for expenses and details of income. Without records to back up the figures players can have their claims challenged and end up owing back tax to HM Revenue & Customs.
9. Penalties for not complying
To avoid penalties players need to make sure they are compliant with their UK tax requirements. This might mean submitting a self assessment tax return or paying underpaid tax on time. If the deadlines are not met a player could find himself subject to unwanted penalties. Equally players can miss off taxable income from their tax return, such as P11d benefits, and face interest and penalties on underpaid tax.
10. Claiming and logging Mileage
If a player drives himself to away games, to meet the coach for away games, to club functions, to medical appointments or between the ground and training ground, a mileage claim of 45p per mile for up to 10,000 miles can be claimed, assuming a mileage log has been kept.
If you are unsure as to whether you are claiming all the tax reliefs you may be entitled to, or feel that you could benefit from a fresh pair of eyes looking at your affairs, then please get in touch to arrange a free without obligation meeting.