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How will Britain’s tax law affect the English Premier League? – SportsUntapped.com
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Added November 5th, 2010 by Ian

How will Britain’s tax law affect the English Premier League?
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It’s been well publicized that professional footballers in Britain are going to be facing a tax increase soon that will see them paying 50 per cent of their earnings to the dreaded taxman. However, somebody recently found a loophole in the system that would have saved them a bit of money. Of course, the newspapers got a hold of it and the government has now confirmed that it will take the appropriate measures to close the hole in the system.

The loophole basically allows players to pay half of their earnings at source into a variety of retirement trusts. This meant the full amount of their earnings couldn’t be taxed. The trust is known as an EFRBS, which stands for employer-financed retirement benefit schemes. Players widely use this scheme as a way to avoid higher taxation. Of course, nobody wants to pay tax, especially at a rate of 50 per cent, so we may see some players opting to play in countries that have lower tax rates from now on.

The money from these trusts is often used to purchase things such as property. Foreign soccer players may also store some of their money off shore if they plan on leaving Britain when they’ve retired. It’s also a bonus for the clubs as they don’t have to pay National Insurance due to the fact the payments are placed directly into the trust.

The football world is upset with the new higher tax law and even feels it’s being discriminated against for some reason. While the tax situation itself can be quite complicated, the main worry by some fans and clubs is that top soccer stars in the English Premier League may start looking at greener pastures to ply their trade in. We may see teams such as Barcelona and Real Madrid offer some incentives to try and lure players to Spain.

It’s true that some players may decide to play elsewhere in Europe, but how many is the question. Closing the tax loophole will surely affect some players more than others and they’ll have to face the fact their paycheques will be smaller starting next year. But pro soccer players are still some of the highest-paid people in society.

If a mass exodus of players does take place it will obviously affect the skill level of clubs and the EPL in general and it could conceivably struggle. We may see players asking for higher wages to make up for their tax losses, but sooner or later the money in football is simply just going to run out unless some type of salary cap is installed for players and/or clubs.

On the bright side, if many of the top stars leave, it means their positions will need to be filled by young, developing players. This would be a positive for home grown players and the English national team would benefit from it. The new tax law and the closing of the loophole could affect the EPL in a few different ways and it’ll be interesting to see which way the tide turns.

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