We all know top-flight footballers do alright. But how does tax work for professional footballers? Is it treated as self-employed income, or is it PAYE through the club’s payroll?

If you’re a footballer you obviously don’t want to get caught offside by HMRC, so we put together this guide to make sense of PAYE, footballers’ taxes, and the other ways money comes into the game. Now, on the referee’s whistle…

What is PAYE?

Quite simply, it stands for “pay as you earn” and is the system through which employees pay tax. It basically sees your employer act as a tax collector on HMRC’s behalf, deducting the tax you owe from your wages.

The two main taxes paid through it are Income Tax and National Insurance, though other types of deductions can also be included, such as pension contributions.

Are footballers employed or self-employed?

All professional football players are under contract with their respective clubs, so in most cases, they’re employees of their club, and pay tax via PAYE. This means your Income Tax and NI contributions are automatically deducted from your monthly salary.

It usually doesn’t even matter whether you’re playing regularly or starting most games on the bench, as a contract is a contract. In fact, a player who’s out injured can be making (and paying) more than one who’s fit and ready to go.

There are also things like goal and/or results-based bonuses to consider, with these sometimes being part of a player’s contract.
 

What about other income, like sponsorship?

Footballers today are much more than just what they do on the pitch. That’s the foundation, sure, but they also have brand deals, endorsements and sponsorships, not to mention the merchandising side of things. So, how does all this affect the way they pay tax?

It can be a bit tricky for footballers, we know – and it’s important to get it right.

First, we have to make a distinction between image rights, which relate to the use of your likeness (like your autograph, kit number, face etc.), and self-employed income, which is payments for what you personally do (for example your time, effort, presence or skill).

Image rights companies

An Image Rights Company (IRC) is a private limited company owned by you to manage any income you get from your personal brand – separately to your club contract as a player.

If a brand wants to use any of your image rights to promote a product (think boots, clothing, ads, and so on), they’ll pay the company, rather than you personally.

Instead of receiving the payments as personal income all at once (and then being taxed on them on top of your salary), you can choose to leave them in the company and pay Corporation Tax on the profits. Corporation Tax is between 19% and 25%, so it’s often more tax efficient to do this.
 

Self-employed income

Now, income from other sources that aren’t related to your image rights is considered self-employed income by HMRC. For example, being paid to attend an event, or a meet-and-greet where you are being paid for your time – and not for use of your image. Instead of PAYE, you’ll simply need to file either a Self Assessment tax return or an MTD Income Tax return.

If you feel like you could use some more help with being as tax-efficient as possible, think about hiring an accountant, who will be able to simplify the whole process for you, as well as offer advice and general guidance.

How much tax do footballers pay?

As with any other employee of a company, the amount of tax a footballer pays is based on the amount they earn (or their income level).

Most professional footballers earn more than the £125,140 additional rate threshold, and so are in the highest tax bracket and paying 45% on any earnings over this amount. That doesn’t mean you’ll pay 45% on all your earnings though!

UK income tax is paid in ‘brackets’ so you’ll pay the rate which applies to the part of your income within a particular bracket.

 
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