Random question about footballers and PAYE
Discussion
Wasn’t sure where to post - please move if necessary
In my random idle thoughts today, I turned to footballers
Footballers are on a fixed-term contract for, say, 2-3 years at a time and earning high wages.
They are, essentially, contractors. Like Tom from IT who lives in a Travelodge during the week.
So why are they on PAYE?
Surely it must be more tax efficient to set up (for example) Harry Kane Football Services Ltd and put everything through that business?
One could claim expenses for Car, commuting costs, etc, etc aswell?
There’s probably a good reason, I was just curious.
In my random idle thoughts today, I turned to footballers
Footballers are on a fixed-term contract for, say, 2-3 years at a time and earning high wages.
They are, essentially, contractors. Like Tom from IT who lives in a Travelodge during the week.
So why are they on PAYE?
Surely it must be more tax efficient to set up (for example) Harry Kane Football Services Ltd and put everything through that business?
One could claim expenses for Car, commuting costs, etc, etc aswell?
There’s probably a good reason, I was just curious.
HMRC have rules around contractors earning all their “revenue” from one company and maybe even proportion of hours.
The simple answer is also because it’s better for HMRC from a revenue perspective! High profile industry so not a good look for football clubs not to me paying Employers NI etc too.
The simple answer is also because it’s better for HMRC from a revenue perspective! High profile industry so not a good look for football clubs not to me paying Employers NI etc too.
They would fail most of the IR35 tests so have to go down as PAYE. They are under direction and control, mutual obligation to provide work, no substitution clause etc.
They do manage to put all of the image rights through a limited company somehow which is where most of the money is routed so I’m sure they won’t be going hungry.
They do manage to put all of the image rights through a limited company somehow which is where most of the money is routed so I’m sure they won’t be going hungry.
bulldong said:
Guess it depends what % of their income comes from playing and what comes from sponsorship.
Footballers are also likely to have staff so there must be a ltd co somewhere in the equation as I wouldn’t like the liability of being sued if I was one.
it NEVER depends on what proportion of income comes from what source.Footballers are also likely to have staff so there must be a ltd co somewhere in the equation as I wouldn’t like the liability of being sued if I was one.
It is completely dependent on the nature of the relationship between the individual and the organisation for which they are carrying out the work.
A professional footballer is engaged by a team to play for them and that team will pretty much have 100% control over his activities as a footballer. Therefore, it would be hard for a footballer to claim that his income from the team was through any sort of "trading" set up as he would not be able to demonstrate any trading indicators.
That does not mean he could not do activities outside his commitments to the team on a self-employed basis - although such activities might be restricted based on the nature of the contract he has with the team.
Muzzer79 said:
Surprised that someone hasn't invented a way around it in some fashion, but all that tax is a benefit for us all at the end of the day!
I think they have - I spent some time as a do sat next to a Lawyer chap a few years ago who worked for Man U. Part of his role was sorting out the way they pay the staff that was acceptable for HMRC. It involved a negotiation with HMRC per player to carve up their image rights by geography and then they paid a different amount of tax depending on where the image rights were based. This applied to players and the managers.
i.e. a player might have a salary in the UK, but is then paid image rights for each of the countries where the PL is shown. The lawyer chap said, you'd be surprised to know that the PL TV is extremely popular in the Cayman Islands.....
Muzzer79 said:
Very interesting. thanks for the replies.
I wasn't aware of the IR35 set up, which seems to rule it out.
Surprised that someone hasn't invented a way around it in some fashion, but all that tax is a benefit for us all at the end of the day!
I’m pretty IR35 was introduced purely to reduce the scope of self employment under these circumstances I wasn't aware of the IR35 set up, which seems to rule it out.
Surprised that someone hasn't invented a way around it in some fashion, but all that tax is a benefit for us all at the end of the day!
dmahon said:
They would fail most of the IR35 tests so have to go down as PAYE. They are under direction and control, mutual obligation to provide work, no substitution clause etc.
They do manage to put all of the image rights through a limited company somehow which is where most of the money is routed so I’m sure they won’t be going hungry.
I still don't know how barbers get away with being classed as self employed. It's obviously disguised employment, and still largely cash based. They do manage to put all of the image rights through a limited company somehow which is where most of the money is routed so I’m sure they won’t be going hungry.
TTmonkey said:
A lot of clubs would have looked at Rangers and said ‘ fuk that’ when players asked to be paid as contractors.....
But they weren't contractors in the true sense, they were employee's of an employee benefit trust, received a PAYE payment and discretionary loans from the trust.And despite Rangers (old co) been liquidated, this means of payment has never been found illegal per se.
markcoznottz said:
dmahon said:
They would fail most of the IR35 tests so have to go down as PAYE. They are under direction and control, mutual obligation to provide work, no substitution clause etc.
They do manage to put all of the image rights through a limited company somehow which is where most of the money is routed so I’m sure they won’t be going hungry.
I still don't know how barbers get away with being classed as self employed. It's obviously disguised employment, and still largely cash based. They do manage to put all of the image rights through a limited company somehow which is where most of the money is routed so I’m sure they won’t be going hungry.
I know someone who owns a hairdressers. She rents chairs to other hairdressers, but it's up to them to build their client list and work whatever days they see fit. If they want to do mobile work, or at home, or even another hairdressers that's all fine. They are all self employed and I can't see how they would fall foul of IR35.
Cash is a perfectly legitimate way of paying for goods and services.
Muzzer79 said:
There’s probably a good reason, I was just curious.
Because them’s the rules of the FA.Depending on how desperately bored you are, go to Section C 1 (b) (vi) here ... http://www.thefa.com/-/media/cfa/hertfordshirefa/f...
bulldong said:
Footballers are also likely to have staff.
Football clubs have player liaison staff who look after them. I also believe that clubs might “pay” a players income tax by inflating the agreed salary to cover what it would cost them. So a player agrees £25k per week but the salary payment is higher so they can actually take home £25k per week.Gassing Station | Finance | Top of Page | What's New | My Stuff