UK tax laws repel top athletes

But this might be about to change.

Hydration, shoes, sponsorship, training, diet… tax rules? The last item in that list will not have been weighing heavily on the minds of many runners in the London marathon last weekend.

They are, however rather more of a consideration for international athletes competing in UK pro-sports events. Thanks to current Treasury policy, entry could easily leave them seriously out of pocket.

The HMRC Foreign Entertainers Unit levies tax on foreign sportsmen and women not simply by reference to earnings made from the events they enter the UK to take part in, but also by looking at global sponsorship income.

At the highest levels of sport, the majority of annual earnings are in the form of such sponsorship arrangements. Sellers of training equipment, drinks, perfumes, watches — even broadband (thank you, Mr Branson) — want a sprinkling of top quality athletic shimmer to help shift their wares. The remuneration for many such favoured athletes makes some of their event winnings look positively mean by comparison.

The UK and US revenues are alone in plundering this branding income of international guests at their championships, matches, games, and competitions — with the result that participation in UK events can appear on stars’ books as a loss-making endeavour.

This policy has in recent years found many top athletes deciding against entering UK events. There is a difficult call to be made as to whether the reputational capital they accrue from appearing in UK events is worth the tax payable. The value a major sponsor may put on their man’s profile in the UK is often quite intangible; the prospect of a bill from HMRC running to tens, or even hundreds of thousands of pounds, is not.

This difficult decision has been averted, however, for two upcoming athletics meetings as after years of lobbying by the sports industry, the Treasury has at last issued a concession to their policy. Buried in the 629 pages of Finance Bill 2013 (only slightly down from last year’s record-breaking 686) lie two clauses that grant exemptions from income tax to accredited competitors at the 2013 Olympic Anniversary Games and 2014 Commonwealth Games. News that Usain Bolt will make his first non-Olympic UK appearance in four years indicates the concession is timely.

This year’s concession is stand-alone, but could augur wider change. The case has long been made that UK plc loses out from its current approach to international sport. The Treasury may see the arrival to our shores of itinerant stars as a cash cow to be milked, but the taxes raised are coming at the expense of more significant opportunities (including the 2010 Champions League final which went to Madrid instead).

The economic rally of Q3 last year demonstrated the value to the UK of hosting international sport. Stand-alone tax breaks encourage competitors to help make such events the international displays of expertise they should be. However, the fiscal atmosphere surrounding them remains tense and the UK could benefit hugely from a permanent softening of its policy.

Edward Keene is from private client law firm Maurice Turnor Gardner LLP. This story first appeared on Spear's magazine

Usain Bolt. Photograph: Getty Images

This is a story from the team at Spears magazine.

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Why the Liberal Democrats by-election surge is not all it seems

The Lib Dems chalked up impressive results in Stoke and Copeland. But just how much of a fight back is it?

By the now conventional post-Brexit logic, Stoke and Copeland ought to have been uniquely inhospitable for the Lib Dems. 

The party lost its deposit in both seats in 2015, and has no representation on either council. So too were the referendum odds stacked against it: in Stoke, the so-called Brexit capital of Britain, 70 per cent of voters backed Leave last June, as did 62 per cent in Copeland. And, as Stephen has written before, the Lib Dems’ mini-revival has so far been most pronounced in affluent, Conservative-leaning areas which swung for remain. 

So what explains the modest – but impressive – surges in their vote share in yesterday’s contests? In Stoke, where they finished fifth in 2015, the party won 9.8 per cent of the vote, up 5.7 percentage points. They also more than doubled their vote share in Copeland, where they beat Ukip for third with 7.3 per cent share of the vote.

The Brexit explanation is a tempting and not entirely invalid one. Each seat’s not insignificant pro-EU minority was more or less ignored by most of the national media, for whom the existence of remainers in what we’re now obliged to call “left-behind Britain” is often a nuance too far. With the Prime Minister Theresa May pushing for a hard Brexit and Labour leader Jeremy Corbyn waving it through, Lib Dem leader Tim Farron has made the pro-EU narrative his own. As was the case for Charles Kennedy in the Iraq War years, this confers upon the Lib Dems a status and platform they were denied as the junior partners in coalition. 

While their stance on Europe is slowly but surely helping the Lib Dems rebuild their pre-2015 demographic core - students, graduates and middle-class professionals employed in the public sector – last night’s results, particularly in Stoke, also give them reason for mild disappointment. 

In Stoke, campaign staffers privately predicted they might manage to beat Ukip for second or third place. The party ran a full campaign for the first time in several years, and canvassing returns suggested significant numbers of Labour voters, mainly public sector workers disenchanted with Corbyn’s stance on Europe, were set to vote Lib Dem. Nor were they intimidated by the Brexit factor: recent council by-elections in Sunderland and Rotheram, which both voted decisively to leave, saw the Lib Dems win seats for the first time on massive swings. 

So it could well be argued that their candidate, local cardiologist Zulfiqar Ali, ought to have done better. Staffordshire University’s campus, which Tim Farron visited as part of a voter registration drive, falls within the seat’s boundaries. Ali, unlike his Labour competitor Gareth Snell and Ukip leader Paul Nuttall, didn’t have his campaign derailed or disrupted by negative media attention. Unlike the Tory candidate Jack Brereton, he had the benefit of being older than 25. And, like 15 per cent of the electorate, he is of Kashmiri origin.  

In public and in private, Lib Dems say the fact that Stoke was a two-horse race between Labour and Ukip ultimately worked to their disadvantage. The prospect of Nuttall as their MP may well have been enough to convince a good number of the Labour waverers mentioned earlier to back Snell. 

With his party hovering at around 10 per cent in national polls, last night’s results give Farron cause for optimism – especially after their near-wipeout in 2015. But it’s easy to forget the bigger picture in all of this. The party have chalked up a string of impressive parliamentary by-election results – second in Witney, a spectacular win in Richmond Park, third in Sleaford and Copeland, and a strong fourth in Stoke. 

However, most of these results represent a reversion to, or indeed an underperformance compared to, the party’s pre-2015 norm. With the notable exception of Richmond’s Sarah Olney, who only joined the Lib Dems after the last general election, these candidates haven’t - or the Lib Dem vote - come from nowhere. Zulfiqar Ali previously sat on the council in Stoke and had fought the seat before, and Witney’s Liz Leffman and Sleaford’s Ross Pepper are both popular local councillors. And for all the excited commentary about Richmond, it was, of course, held by the Lib Dems for 13 years before Zac Goldsmith won it for the Tories in 2010. 

The EU referendum may have given the Lib Dems a new lease of life, but, as their #LibDemFightback trope suggests, they’re best understood as a revanchist, and not insurgent, force. Much has been said about Brexit realigning our politics, but, for now at least, the party’s new normal is looking quite a lot like the old one.