A decision by the Government to relax the tax rules on foreign sports stars competing in Britain in a move aimed at allowing high profile athletes like Usain Bolt and Rafael Nadal to take part in events in the United Kingdom on a more frequent basis, has been welcomed by top officials.
The tax rule meant that any sportsperson that was not resident in the UK was subject to income tax on any payment in connection with their performance in the country, including a proportion of any worldwide endorsement income.
Jamaican sprint icon Bolt boycotted the Aviva London Grand Prix at Crystal Palace for the last two years because the British tax system meant that he would face having to pay more money than he earned by competing.
The same issue caused Spain’s tennis star Nadal to rule himself out of the Queen’s Club tournament in west London this June, where he has competed for five of the past six years, and instead opt to play in Halle in Germany in the same week because he says he would lose money by competing in England.
But the new announcement, which came as part of the 2012 Budget this week, means that Her Majesty’s Revenue and Customs (HMRC) take training days into account when calculating the proportion of worldwide endorsement income subject to UK tax.
Ultimately, this means that top sporting stars will be able to compete in Britain without being heavily taxed.
“As the lead agency for bringing major sporting events to this country, we welcome anything that makes the UK a more competitive and attractive host,” Simon Morton, UK Sport’s Director of Major Events and International Relations, told insidethegames.
“We have an ambitious strategy for bringing events to cities and regions across the UK post 2012, and, having already secured a number of world class events for this period, including the 2017 World Athletics Championships, this is a further positive step towards positioning the UK as a world leading sporting host nation.”
Before the move, there were already income tax exemption measures in place for the London 2012 Games to ensure that the world’s highest earning stars did not boycott the event.
A similar measure is in place for Glasgow 2014 Commonwealth Games in a bid designed to try to ensure high profile stars like Bolt compete in the competition.
The Lawn Tennis Association (LTA) chief executive Roger Draper has also welcomed the announcement as he aims to bring the world’s top tennis players to British soil.
“I am pleased that the Government, like us, recognises that the existing rules on endorsement tax pose a serious risk to the status and growth of our major sporting events,” he said.
“We will study this change in more detail, but I would like to thank the Government, and particularly the Sports Minister, Hugh Robertson and David Gauke, Treasury Minister, for taking the time to listen to our concerns, and also the AELTC (The All England Lawn Tennis & Croquet Club Limited) and the ATP for working with us to find a resolution.”
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