The proposal by Richard Caborn to red card footballers one-off paydays comes just days before the new football season kicks off on Saturday.
Caborn wants the Treasury to look at the practice of testimonials to see whether they should remain tax free.
One option would be to set an earnings ceiling and make any players paid more than a certain limit pay tax on any income from such occasions.
Testimonials were originally introduced to reward injured or loyal players after 10 years’ service. But that was in the past when footballers’ earnings were only a fraction of today’s towering wages and were even restricted by a maximum wage law.
English champions Manchester United are to play Scots giants Glasgow Celtic in a testimonial for their winger Ryan Giggs tomorrow, with the sell-out Old Trafford clash expected to add at least £1m to the Welsh international’s tax free earnings from testimonial events this year – taking the total to almost £2m.
Giggs also recently scored a new contract with the club, which will see him net £50,000 a week, equivalent to more than £2.5m a year.
But the Professional Footballers’ Association has defended benefit matches.
In a BBC report, however, PFA chief executive Gordon Taylor, admitted: ‘Whether it’s justified financially is open to question.’
Guidance states such matches are technically subject to tax, but also indicates ways in which the tax bill can be avoided. To qualify as a tax-free testimonial, the match must be organised by a committee or third party.
The Revenue cannot claim any money raised by a testimonial as the fans are not forced to watch so the money is a gesture of goodwill. But if it was a condition of a footballer’s employment that they can have a benefit after ten years it would be taxable.
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast
Accountants should alter their perspective on auto-enrolment to maximise business opportunities, according to Eric Clapton.
Kevin Reed discusses whether new accountancy group Cogital can rival the Big Four...and its likely direction of travel