A decent young man

[EddieM]

Yes, all companies pay tax on their profits but I he pays himself a salary through the limited company, he’ll pay £6.7m in income tax PLUS £309k NI, PLUS the company will have a £2m+ NI bill. He'll end up with 'just' £6m in his pocket. You can rest assured he won’t be doing that.

If he pays himself in dividends through the limited company, he'll pay about £5.7m in dividend tax, **** all in income tax and no personal or company NI contributions (dividends are exempt from NI) and end up trousering £9.3m

It’s a little bit more involved than that and there’s lots more ways to minimise the total tax payable but you can see there’s a clear benefit for being paid in dividends rather than a salary and it’s all perfectly legal and above board. Most Ltd company directors pay themselves in dividends and not income.

It may have changed this year but here’s my calcs based on last years allowances/taxation rates.


View attachment 152963 View attachment 152964

Apart from the inconvenient fact, that you can't just pay yourself dividends unless you want to attract some serious unwanted HMRC attention.

Plus of course he *could* be IR35'ed.

 

[Mottie]

You can pay yourself as much as you like in dividends as long as they come out of profits and I don’t think he’ll be bothered by any investigations - anyone earning that sort of dosh won’t be filling their own tax returns in and can afford a pretty top notch firm to do it all for them. Rules for all this benefits high earners like him unlike the more modest earners who can’t get away with anything like that and you can be sure that whoever does his tax returns knows every (legal) trick in the book. Only time will tell.

 

[SirGalahad]

MOTman must hate Kante lol.

Players are not your average run of the mill independent contractor. Players are coached, trained, fed, rehabilitated by the club. On top they can access other support services and to top it off the club owns their registrations so unlike an independent contractor they can't just decide to go play for another club.

Also why would clubs buy insurance if players get career threatening injuries if they are private contractors as you make out.

What players can do is split their wage into image rights and have those paid separately to their wage but this is something the HMRC are clamping down on.

 

[EddieM]

You can pay yourself as much as you like in dividends as long as they come out of profits and I don’t think he’ll be bothered by any investigations - anyone earning that sort of dosh won’t be filling their own tax returns in and can afford a pretty top notch firm to do it all for them. Rules for all this benefits high earners like him unlike the more modest earners who can’t get away with anything like that and you can be sure that whoever does his tax returns knows every (legal) trick in the book. Only time will tell.

You can *try* to pay yourself in dividends only, but it will attract the attention of HMRC, In days gone by, this was also somewhat counterproductive in that you could only contribute a certain percentage of your salary into a pension. Additionally for the average Joe, not paying NI, isn't good for your old age pension, of course none of this matters if you're a multi millionaire.

 

[durhamplumber]

I won't be surprised if the money dribbles out, as directors fees or dividends, to him over quite a number of years, because his playing career will be much shorter than a normal working life. This may have the effect of reducing his tax bracket, and saving NI. Perhaps his company will diversify into other line of business, such as a Caribean hotel, which the directors will be obliged to visit from time to time.

Company contributions to his pension scheme will be free of income tax, NI and corporation tax.

Even a plumber can do all that.

Professional sportsmen AFAIK still have special rules allowing them to draw their pension quite young, when they're "past it."

Even you Jonny Boy,Yes I know its an extreme long shot

 

[JohnD]

yes, I have had company contribution to my pension account.

But none of the other schemes.

I am not a footballer.

 

[Mottie]

MOTman must hate Kante lol.

Not at all. Good luck to him I say. I also don’t blame footballers earning what others call 'obscene' amounts of money. When clubs charge ridiculous amounts for people to watch 90 minutes of football, why shouldn’t they get a decent cut of that? I also don’t blame anyone for paying as little tax as they legally can - if others think they should be paying more, blame the government as its them that make the rules of taxation up. Just saying, the figures quoted as to what tax he will be paying in the newspaper article are all tosh!