Professional Footballers: Engage Guide To Wealth Management
Part 3: Tax Planning & Estate Planning
Know your income; know your tax.
As a footballer, your single largest lifetime expense will be...your tax bill. It’s not sexy, but it’s true.
To understand your taxes, you have to understand the types of income you can earn.
PAYE Income
This is the money that you make on the pitch - your salary and bonuses from your club.
Other Income
This is the money that you make off the field - endorsements, signings and sponsorships.
This is often put through an Image Rights company. With this company set up, you will only pay corporation tax on any profits at 25% as opposed to 45% income tax (current tax rates). There will be dividend taxation, if and when you withdraw from the company, but you can be flexible on when and how to draw this income. Most high level players will leave this income in the company until after their career has finished. This way they can begin to have an effective income tax strategy.
NB: If you go abroad on European tours, there may be taxation issues with sponsorship overseas income.
And then there is Tax Coding
We recommend you get your tax code checked annually. We have had instances where players have underpaid tax through PAYE. Whilst it’s not your job to check your tax coding, it will be your responsibility to pay the difference to HMRC.
Why Estate Planning is not just an old man’s game.
Traditional Estate Planning:
The four key considerations:
1. Guardianship Who will take care of those in your legal care?
2. Medical Directive Who will make health care decisions, if you can’t?
3. Financial Directive Who will handle your financial decisions, if you can’t?
4. Will Where will all those key belongings go that aren’t able to be titled in your estate?
Estate Planning for Footballers:
Looking beyond the traditional:
• Do you want to make sure your hard earned money is protected?
• Do you want your money to have a future direction?
• Do you know the statistics on footballers and divorce?
• If you were to pass away, is your partner or spouse likely to marry or re-marry?
Footballers are young clients. For them, estate planning needs to go beyond the traditional approach of gifting assets and having a Will (although these are important and need to get done). It’s about looking at it through a different lens…