As part of the senior team at LWA, we have a member of the International Sports Tax Association (ISTA) through our Tax Manager, Nickie Antley-Slater, and a Director, Steve Collings, who is globally known for his accounting knowledge, giving our firm an understanding of the unique complexities faced by those in the sports industry. In this blog, we explain why taxation for sportspeople requires specialist knowledge, focusing on UK tax laws and the various nuances that come with them.
Confidentiality in the sports industry
Confidentiality is paramount in the sports world. Sports professionals often have high public profiles, and any financial details being leaked can have significant repercussions. This is not only about the potential for public scrutiny but also the impact on their personal and professional lives. A breach of confidentiality can lead to negative media attention, strained relationships with sponsors, and even a loss of endorsement deals.
Sports tax advisors should understand the critical importance of maintaining strict confidentiality for clients, adhering to stringent confidentiality protocols to protect the privacy and financial integrity of those we serve. This includes the use of secure communication channels, employing robust data protection measures, and ensuring that all staff are trained in handling sensitive information with the utmost care. By prioritising confidentiality, our team at LWA provide a safe and trusted environment for sports professionals to manage their tax affairs without fear of exposure or unnecessary risk.
Increased scrutiny by HMRC in the tax treatment of sports players
Sports professionals often face increased scrutiny by HMRC due to their high earnings and the complex nature of their financial affairs. HMRC closely monitors individuals in high-income brackets to ensure compliance with tax regulations. This heightened attention is particularly relevant for sportspeople who frequently receive income from various sources, including salaries, sponsorship deals, and image rights.
Additionally, specific regulations apply to different sports. For example, rugby players have particular rules applied that affect how their incomes are taxed, which can impact those that play within the Rugby Football League (RFL). According to HMRC guidelines (EIM64150 - Tax treatment of Rugby footballers), certain payments to professional sports players, such as bonuses or appearance fees, are subject to detailed scrutiny to ensure they are correctly reported and taxed. This makes it crucial for sports professionals to have expert tax advisors who understand these specific rules and can navigate the complexities of their financial situations.
Tax of sports agent fees
Agent fees are a significant aspect of a sports professional’s expenses. Agents play a crucial role in negotiating contracts, securing endorsement deals, and managing various aspects of a sports professional's career. However, claiming tax relief on these fees can be complex, as HMRC imposes stringent rules on what can and cannot be claimed.
Testimonial rules on tax
Testimonials are a long-standing tradition in sports, but the tax implications can be tricky. Depending on the circumstances, some clubs can qualify for a £100,000 tax exemption, while others cannot - generally very few players will qualify for it. The conditions of the exemption need to be met by the club that the player plays for and whether it is customary to offer a player a testimonial. If it is, then the exemption doesn’t apply, however if it is not part of a club’s usual activity to offer a player a testimonial, then the exemption can apply. Whilst the criteria are clear, the rules can often be misinterpreted or in many cases not even considered, leading to incorrect claiming of the exemption and subsequent challenges from HMRC which could prove quite costly. LWA’s detailed knowledge of these rules allows us to guide individual clients through the process on a case-by-case basis, ensuring compliance and maximising potential tax benefits.
International sports players and tax rules
For international players, understanding the different tax rules in the UK compared to their home countries is crucial. We provide tailored advice that considers both UK tax laws and the tax implications in other jurisdictions, ensuring our clients are fully compliant and tax-efficient on a global scale.
Sports tax grey areas and what can’t be claimed
Taxation in sports is far from straightforward. There are numerous grey areas that require careful analysis. Understanding what cannot be claimed is just as important as knowing what can. For example, personal expenses that are not directly related to the performance of their duties are typically non-deductible. This includes things like personal grooming, everyday clothing, and personal travel. Our role is to provide clarity and ensure our clients are aware of these nuances to avoid any pitfalls.
Why choose LWA as your sports tax advisors?
At LWA, we have a proven track record of working with footballers, rugby players, coaches, boxing professionals, and trainers. Our team’s extensive experience and specialist knowledge mean that we are perfectly positioned to handle the unique tax challenges faced by those in the sports sector.
Our team is well-versed in handling the intricate details of sports taxation. We stay up-to-date with HMRC guidelines and ensure that all income, from match fees to endorsement deals, is accurately reported and compliant with tax laws. Our goal is to minimise the risk of non-compliance and provide our clients with peace of mind, knowing that their tax affairs are in expert hands.
We help sports professionals optimise their tax positions and avoid potential pitfalls that could arise from misinterpreting these complex rules.
As well as being bound by client confidentiality rules of our professional body, the Association of Chartered Certified Accountants (ACCA), our commitment to confidentiality goes beyond just safeguarding information; it extends to offering a personalised service that respects the unique needs and concerns of each client. We recognise that every athlete's situation is different, and we tailor our approach to meet those specific needs, ensuring that all interactions are conducted with the highest level of discretion. This dedication to confidentiality is a cornerstone of our service at LWA, allowing sports professionals to focus on their careers with the confidence that their financial matters are in expert and trustworthy hands.
Being part of ISTA means that Nickie has access to a wealth of specialist resources and expertise, ensuring that we stay at the forefront of sports taxation.
We’re here to help with sports tax advice
If you’re a sports professional or working in the sports industry in the UK, LWA are here to provide expertise in the field of sports taxation. Speak in confidence to our Tax Manager, Nickie Antley-Slater via mail@lwaltd.com or you can call us on 0161 905 1801 in our Manchester office or 01925 830 830 in Warrington.
Visit our sports sector services page in the meantime to learn more about how we can assist you.