Caborn calls for cap on testimonials

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The Sports Minister, Richard Caborn, has recommended that the Government set a limit on the amount that highly paid footballers can receive tax-free from testimonial matches, while still allowing lower division players to enjoy the full rewards of benefit games.

Caborn's concerns come in the wake of Ryan Giggs' testimonial last night against Celtic, which earned the Manchester United winger about £1m tax free. Giggs already earns £2.5m a year in wages and another £1m in endorsements.

Caborn yesterday wrote to Dawn Primarolo, the Paymaster General, on the issue. The letter read: "I understand that the substantial amount that Mr Giggs is likely to receive from the proceeds of the match will not be subject to tax. The treatment of testimonial income paid to leading players has been an issue of public concern for some time, and I am writing to seek the Treasury's views on what appears to be an anomaly in taxation policy."

Caborn adds that the practice of tax-free testimonials for long-serving players at lower division clubs is "entirely reasonable". "Many earn modest salaries and often face some uncertainty at the ends of their careers in football. However, it does not appear reasonable in respect of players who are already well-rewarded by top clubs.

"Department of Culture, Media and Sport officials discussed this issue informally with your department last year.

"I understand that some thought was given at that time to revising taxation law in this area, perhaps by setting a tax-free limit on testimonial receipts and subjecting any excess to tax at the appropriate rate.

"So long as any tax-free limit were set so as to protect the present interests of lower division players approaching retirement, I would support such a change in principle."

If such a limit was set at, for example, £100,000, there would be few if any non-Premiership players earning that from a testimonial. Thus, of the £1m expected from the Celtic match, Giggs would have to pay tax on £900,000 taking his net earnings down to £640,000. A Treasury spokesman yesterday promised to consider Caborn's call but said no changes were currently planned.