Where does the suggestion of a £200m loss to the exchequer come from?
That was the claim made by the Professional Footballers’ Association last week. It was made in response to a Premier League proposal that players should agree to a reduction in their wages of up to 30% during the coronavirus crisis.
The PFA said: “The proposed 30% salary deduction over a 12-month period equates to over £500m in wage reductions and a loss in tax contributions of over £200m to the government.”
There has been debate over whether this number was accurate, but according to Nimesh Shah, a partner at the accountancy firm Blick Rothenberg, it is likely an underestimate.
“Most Premier League players will be earning way over £150,000 a year so will be paying 45% rate of income tax,” he says. “Then there is national insurance, which would add to that calculation.”
With the total annual wage bill of the Premier League standing at £1.6bn annually, according to the 2019 Global Sports Salary Survey, a 30% cut would amount to £480m. Based on that figure, the amount of lost tax would be £216m in income tax and £9.5m in NI, giving a total of £225.5m.
But what if the wages were given to charity?
That has been the implication of some of the criticism emanating from politicians, with the health secretary, Matt Hancock, directly comparing the intransigence of footballers to the sacrifices of NHS workers, while the culture secretary, Oliver Dowden, has asked footballers to make a contribution to the “National Effort”.
Premier League captains are setting up a fund to donate money to the NHS and charitable causes. But Shah suggests that any charitable donations may only hit the government further in the pocket.
“Donations to charities have their own implications wtih regards to tax, with a whole myriad of positions that could follow,” he says. “Clubs could get tax relief on their donation, players could too and they would get extra relief from being a top rate tax payer. When an individual makes a donation the government must also top it up with gift aid. That could end up costing government even more.”