Treasury needs to remove sports tax hurdles
Tax exemption for the London Grand Prix illustrates Treasury's piecemeal approach to sports taxation
THE TAX EXEMPTION for the 2013 London Grand Prix athletics event is yet further evidence of the Treasury’s lack of foresight with regards to the benefits that major sporting events bring to the UK.
We have calculated that the annual income tax collected on endorsement income from non-resident sportspeople is between £7m and £8m per annum, a tiny amount compared to the contribution sport makes to the UK Exchequer.
In economic terms, the taxation foregone by removing the obligation to pay tax on worldwide endorsement income is vastly outweighed by the economic benefit from increased ticket sales, and associated revenues associated with huge crowds attending such an event.
Whilst any exemptions to encourage events in the UK are welcome, it is clear that the rules should be changed.
By abolishing the collection of income tax on a proportion of global endorsement income, the UK would fall into line with almost all other countries. Sportspeople would then know that they could compete in the UK without the fear of paying more in UK income tax than they would earn, which has been the case in the past for individuals like Usain Bolt.
That is why we at Saffery Champness call on the government to stop with piecemeal approach and remove the UK rules on the taxation of endorsement income, which would mean the Treasury would not have to issue tax exemptions to secure the participation of major global stars in UK events.
Julian Hedley is head of the Sports and Entertainment Group at Saffery Champness