This actually makes sense, amazingly

Chancellor George Osborne announced in his Budget last week that star athletes such as Bolt would be exempt from paying income tax at the Commonwealth Games in Glasgow next year and that the same exemption would be extended to the athletics event in London on the first anniversary of the Olympics.

Teams playing in the Champions League final at Wembley this year will also be exempt from tax, following requests from Uefa.

However, it is understood that the International Rugby Board did not make any request to the Department of Culture, Media and Sport that overseas players should receive a tax exemption during their stay in the UK. The tournament will run from Sept 18 to Oct 31.

Her Majesty’s Revenue and Customs taxes the earnings by overseas athletes from appearance fees and prize money at 50 per cent. It also taxes athletes on a proportion of their global endorsement income.

The number of days a foreign athlete spends training and competing in Britain a year is divided by the total number of days the athlete trains and competes around the world. HMRC uses the figure to calculate the percentage of global income that is taxable.

No, not the basic law, which I think is horrible. But the IRB not asking for an exemption.

For the Olympics, World Cup, Euro and Champions, it\’s a basic condition of the contract that the country hosting does not tax the people. They just won\’t award it to a country that does not provide the exemption. So, if you want to host the event then you\’ve got to provide the exemption.

With athletics, it\’s an individual sport. Easy enough for Bolt to say the hell with the Commonwealth Games, or some meeting in London a year after the Olympics. You want him to turn up then you\’ve, again, got to exempt. Tax and don\’t have him by all means: but that is the question.

Rugby is very different. The money in the game is in playing (in the larger nations at least) for the country. Not turning up for the World Cup over taxation will lose you a lot more dosh than coughing up what is demanded.

Just to be clear here, HMRC taxes on total global income x percentage of training and competing days done in UK. So someone with decent endorsement money say, can certainly end up paying more than they would earn for the six/eight weeks of the World Cup. But, not to turn up and play in the World Cup would lose more than that tax in reputation and future opportunities.

Thus Osborne\’s decision (assuming the IRB did ask but informally and were told no) makes sense. The art of taxation is to do it where you can. And no one is not going to play at the World Cup because of tax. Because that\’s where the money is, the reputations are made. Thus, tax them, for they\’ll turn up to be shorn anyway.

Unlike Bolt, or soccer players perhaps, where the money is in playing for a club.

Don\’t confuse this with morality or justice. This is tax which has nothing to do with either. It\’s who can we nick it from, not who should we.

10 thoughts on “This actually makes sense, amazingly”

  1. Good analysis Tim, although I disagree with your final conclusion.
    As an aside, what goes for rugby goes many times over for golf and tennis AND Olympic athletes. Not turning up at London 2012 would have shot Usain’s commercial bolt well and truly.
    My disagreement though is based upon the management of tax policy. Income and property is the individual’s; not the state’s. I am not Ritchie, so we don’t need that discussion. And yes, I get that tax is about what you can get from whom. However, tax is also Law and the law must be fair. To be fair it must be blind or it is not fit for democratic purpose.
    So an exemption for a “special case”, be it the Olympics, the football World Cup, the Rugby Union or Rugby League World Cups, some famous athlete throwing a diva fit, a Russian with access to Polonium, an Arab with hostages; all undermine the rule of law.
    Want to know why my lefty friends want press regulation? Because “these bastards” need sorting out. That’s the alternative: laws aimed to get individuals; welcome to Ritchieland.
    Once the exemption is given to one group or to one person, the lid is off and the tax provision should withdrawn completely.

  2. I previously understood that it was only the days an athelete competed that counted and not the days of competition AND training.

    Thus (and I’m sure I read it here) that someone like Usain Bolt only took part in a few events a year. So if he came to, say, the Doncaster 100m race he’d end up having to pay (say) 10% of his global income to take part in one race.

    However if you include training days (for tax purposes 365 days a year, even if training is just a bit of light stretching and a sauna) then that Doncaster race weekend suddenly becomes a far more manageable 2/365 of his global income. Which seems emminently fair.

  3. Ironman (#1)

    Agree completely – the irony is by harkening back to, well, frankly the middle Ages in terms of laws designed to impact specific individuals, Ritchie and his ilk are laying the groundwork for the reintroduction of legislation like an Act of Attainder were a government so inclined. That they seem blissfully unaware of this is in keeping with their general stupidity.

  4. Shinsei’s system sounds reasonable at first, until you try to apply it more widely to all other workers. If I spend six months working 60-hour weeks in the UK, then take a six-month holiday in a low-tax jurisdiction (say, the Maldives), then can I claim back half of my income tax for the year?

  5. For the avoidance of doubt, I think this entire piece of tax law has outlived its purpose and should just be scrapped.

  6. Ironman

    ” To be fair it must be blind or it is not fit for democratic purpose.”

    I have a feeling that whether or not you see a tax as fair depends heavily on whether you are paying it, and how much.

  7. Luke, I doubt that Ironman (or any other commenter) is a world class athlete. So his opinion on this topic is entirely disinterested.

  8. I just wish I had a skill so rare that I could say “don’t charge me income tax or I won’t work for you” and governments would just go “ok, then, we won’t.”

    All right for some, eh?

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