Bolt from the blue!

Those with even a passing interest in athletics will have heard of Usain Bolt, currently the fastest man in the world.  However, fast as he is, he isn’t fast enough to escape the taxman in the UK.  People may have read of Bolt’s decision to turn down an invite to run in London’s Grand Prix athletics event and may be wondering why he did this (besides the fact that he is now injured anyway!!).  The answer is to do with tax and with a change in the taxman’s attitude to taxing international sportsmen and women who visit the UK.

You might think that if an international sportsman (say a golfer) comes to the UK and wins £100,000 in a golf tournament that the taxman would be happy with a share of that £100,000.  Well, that wasn’t enough for the taxman who decided that he should try and tax the sportsman’s sponsorship and advertising income as well.  The argument ran that if a sportsman took part in 20 events during the year, then if two of those were in the UK, the taxman was entitled to tax 10% of the sponsorship income the sportsman received during the year.  The test case for this involved Andre Agassi in 2006 and the taxman won in court.

The result could be expensive for some athletes who might take part in only 3 or 4 events a year.  Certainly Usain Bolt (or his accountant) has done the sums and worked out that the prize money for coming first at the Grand Prix would be less than the tax that might be demanded from a share of the year’s sponsorship income.

Is the Government aware that this might drive sportsmen away?  It must be, as exemptions to this rule have already been granted for the Olympic Games in 2012 and the Champions League final to be held at Wembley in 2011.  Meantime, if you wonder why top golfers limit their visits to the UK or why other top sportsmen don’t attend UK events, you can thank the taxman.

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