Taxman on alert as footballers look to sidestep 50% rate

Footballers could face an own goal if advisers help them avoid the new 50% tax band for high earners, warns the tax profession.

Premier league players are said to be looking to avoid the 50% tax band by having their salaries paid as interest-free loans, which would instead attract a 2.5% tax as a benefit in kind.

If the rate was reduced to 40% in the future then clubs could write off the loans and treat the payment to players as income. The players would then pay an effective rate of 42.5% instead of 50%.

However, advisers have warned that the strategy could come back to haunt the players, as the threat to government coffers could move HM Revenue & Customs to introduce retrospective legislation to block the scheme and recoup tax.

‘It would be a red rag to a bull,’ said Smith & Williamson national tax director Richard Mannion. ‘The sort of headlines this story has had will mean the Revenue will look at it closely.’

Baker Tilly tax director Kevin Hall said that advisers could potentially avoid having to flag up the strategy under the tax avoidance disclosure regime of HMRC if they don’t market it to players.

‘If someone comes to you [for advice] then it doesn’t hit one of HMRC’s “hallmarks” but, if you standardise it and market to 50 players, I’d have thought it comes under the disclosure regime.’

‘I’d be concerned that it’s an emotive issue, and the government wouldn’t want to see the rich getting around the tax band.’

HMRC said it would not comment on individual cases.

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