Tax loophole to close and deny players millions
The Inland Revenue has confirmed that it will move to close the tax loophole used by Premier League footballers to protect their multimillion pound salaries, as revealed in The Independent yesterday.
The EFRBS – employer-financed retirement benefit schemes – have become popular with Premier League and some Championship clubs and are routinely offered as part of contract negotiations to top players.
They allow high earners such as footballers or City bankers to pay 50 per cent of their income at source into trusts, which prevents the Revenue from taxing them fully.
The trusts can be used to buy assets such as property and are particularly attractive to foreign players who can keep their money offshore and who intend to leave the United Kingdom when they finish playing professional football. They have become extremely popular with footballers subject to the new 50 per cent high rate of income tax.
Clubs also favour the EFRBS because these allow them to make a saving on the 12.8 per cent National Insurance payments they would otherwise have to make on the proportion of the salary that is placed in a trust. It has also allowed them to give players a benefit to compensate for the new rate of taxation of high earners.
The feeling among the football fraternity is that players are increasingly targeted by the Revenue because of the very public nature of their contract negotiations and the reporting of their wages. It is the current Government that has pressed ahead with plans to bring forward the legislation to close off EFRBS.
The Treasury and the Revenue announced this month that they intend to shut the loophole and force those using them to fall into line with the £25,000 tax relief permitted annually on pensions. There is a concern among players that their funds could be taxed retrospectively.
The Revenue said this month: "These vehicles are essentially a type of employee benefit trust, and alongside other intermediary vehicles can be used to disguise remuneration and avoid, reduce or defer payment of tax.
"The June Budget confirmed that the Government will take action against intermediary vehicles, including EFRBS, being used in this way."
Latest in Sport
Chelsea victory parade mocked on Twitter as 'tens of fans' pack the streets of London
Jack Wilshere wins Match of the Day Goal of the Season award after Arsenal fans hijack vote
Young Preston fan has play-off hero Jermaine Beckford's shirt stolen from him at Wembley - which then appears for sale on Gumtree
Chelsea victory parade: Fans chuck celery at Sky News presenter ahead of champion's parade through London
Welcome to West Ham United: the home of deluded fans and the most clueless owners
- 1 Cyclist who knocked down three-year-old girl says his life has been 'destroyed'
- 2 Chelsea victory parade mocked on Twitter as 'tens of fans' pack the streets of London
- 3 US warned by Chinese media to stop meddling or 'war will be inevitable'
- 4 Woman, 21, dies after taking contraceptive pill that 'caused fatal blood clot'
- 5 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
The day that Britain resigned as a global power
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
A nation of inequality: How the UK is failing to feed its most vulnerable people