 Man Utd playing for the taxman
25 MAY 2011: Calculations by PKF Accountants & business advisers suggest that George Osborne has had a lucky break. By reaching this Saturday’s Champions League final at Wembley, Manchester United have already saved the Exchequer an estimated £1.25m. If they win, that will be boosted by a further £750,000, earning the taxman nearly £2m.
The reason is that the government generously decided to offer a complete tax exemption to overseas football teams playing in the Wembley final but did not extend this to British clubs or to other foreign sports stars.
Lionel Messi and his Barcelona team mates get a salary on average of almost £5m a year and will possibly more than double that with sponsorship. Therefore, without the exemption, each player would have had to pay UK tax on as much as £250,000 of income (see notes for calculation).
Philip Fisher, Head of Employment Tax and Rewards at PKF, comments “The highly paid stars of Barcelona will get a windfall this weekend as their pay will be free of UK tax, while our local heroes face a significant tax bill. With prize money of €9m (£7.9m) for the winners and €5.6m (£4.9m) for the runners-up the taxman will certainly be supporting Manchester United. If only Arsenal or Spurs had made it to Wembley instead of Barcelona, the exemption wouldn’t have cost us a penny.”– ends – For further information, please contact:
Andy Konieczko, PR Manager, on 020 7065 0537, andrew.konieczko@uk.pkf.com
Notes to Editors:
1. Recent Figures from ESPN show Barcelona players are, on average, the highest paid team players in the world getting over £4.9m a year for playing around 50 matches a season.
2. The UK taxing principle was set in a case involving tennis player Andre Agassi. Broadly, wages and sponsorship payments for work done in the UK (i.e. playing in the final at Wimbledon or Wembley) are taxable here. The courts have decided that the calculation uses the UK playing days divided by total playing days – i.e. 1/50 for the Barcelona players (around £100,000 on wages alone) if they were not specifically exempted.
3. Footballers typically have to adjust the tax they pay at the end of the year taking into account expenses and commissions; this might leave an effective rate of around 25%.
4. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
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