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 Theresa May can't end speculation of an early general election

Both Conservative and Labour MPs regard a contest next year as the solution to their problems. 

One of Theresa May’s first acts as a Conservative leadership candidate was to rule out an early general election. After a tumultuous 2015 contest and the EU referendum, her view was that the country required a period of stability (a view shared by voters). Many newly-elected Tory MPs, fearful of a Brexit-inspired Ukip or Liberal Democrat surge, supported her on this condition.

After entering Downing Street, May reaffirmed her stance. “The Prime Minister could not have been clearer,” a senior source told me. “There won’t be an early election.” Maintaining this pledge is an important part of May’s straight-talking image.

But though No.10 has wisely avoided publicly contemplating an election (unlike Gordon Brown), the question refuses to die. The Conservatives have a majority of just 12 - the smallest of any single-party government since 1974 - and, as David Cameron found, legislative defeats almost inevitably follow. May’s vow to lift the ban on new grammar schools looks to many like an unachievable task. Former education secretary Nicky Morgan and former business minister Anna Soubry are among the Tories leading the charge against the measure (which did not feature in the 2015 Conservative manifesto).  

To this problem, an early election appears to be the solution. The Tories retain a substantial opinion poll lead over Labour, the most divided opposition in recent history. An election victory would give May the mandate for new policies that she presently lacks.

“I don’t believe Theresa May wishes to hold an early election which there is evidence that the country doesn’t want and which, given the current state of the Labour Party, might be seen as opportunistic,” Nigel Lawson told today’s Times“If, however, the government were to find that it couldn’t get its legislation through the House of Commons, then a wholly new situation would arise.”

It is not only Conservatives who are keeping the possibility of an early election alive. Many Labour MPs are pleading for one in the belief that it would end Jeremy Corbyn’s leadership. An early contest would also pre-empt the boundary changes planned in 2018, which are forecast to cost the party 23 seats.

For Corbyn, the possibility of an election is a vital means of disciplining MPs. Allies also hope that the failed revolt against his leadership, which Labour members blame for the party’s unpopularity, would allow him to remain leader even if defeated.

Unlike her predecessors, May faces the obstacle of the Fixed-Term Parliaments Act (under which the next election will be on 7 May 2020). Yet it is not an insurmountable one. The legislation can be suspended with the backing of two-thirds of MPs, or through a vote of no confidence in the government. Alternatively, the act could simply be repealed or amended. Labour and the Liberal Democrats, who have demanded an early election, would struggle to resist May if she called their bluff.

To many, it simply looks like an offer too good to refuse. Which is why, however hard May swats this fly, it will keep coming back. 

George Eaton is political editor of the New Statesman.