Footballers using tax loophole to save millions
Thu 28th Oct 2010 | Money & Finance
Some of the UK’s top footballers are using a major loophole to avoid paying tax on their multi-million pound salaries according to an investigation by The Independent newspaper today.
The report reveals how up to 75% of Premier League clubs are using a scheme known as EFRBS to allow players to avoid up to 50 per cent of income tax as they seek to keep the top stars playing in the league.
The EFRBS scheme (employer-financed retirement benefit schemes) allows the players to sacrifice up to 50 per cent of their wages at source to be placed in a trust that is set aside for their retirement.
By using the scheme clubs are also able to save on National Insurance payments as the money is paid directly into the scheme.
Wayne Rooney’s new £200,000 a week salary is thought to include EFRBS which would see him banking more of his wages and less to the taxman.
Closing the loophole is now a priority of HMRC as they attempt to reduce the amount of tax lost to these types of schemes.
A spokeswoman for the Inland Revenue said last night that as of this month it would be acting on the government's initiative to bring forward legislation to curb the use of EFRBS for high earners.
The Inland Revenue said in a statement it would "ensure that funded EFRBS are less attractive than other forms of remuneration".
It added: "It will also continue to monitor changes in patterns of pension saving behaviour for all other forms of EFRBS on which it will be ready to act if necessary to prevent additional fiscal risk."
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