UK Soccer Players Must Navigate Tax Obstacles of Saudi Move

The 2023 summer transfer window saw many high-profile soccer players move to the Saudi Pro League, including several from the English Premier League. Although the quality of play may not be comparable (yet), what players can earn in Saudi Arabia blows the EPL clubs’ wages out of the water.

The Saudi Pro League’s gross salaries are higher, but it’s the difference in net salary that makes the deals so appealing. In the UK, players pay roughly half of their earnings in taxes. Meanwhile, there’s no income tax for players in Saudi Arabia, so take-home pay is doubled for the same deal.

However, it may not be that straightforward for players moving from the UK, and a nasty, expensive tax trap could await them.

The key issue is the statutory residence test in UK tax law. The SRT determines how many days can be spent in the UK before residency kicks in, and players who have moved to Saudi Arabia this summer likely already have spent sufficient days in the UK since April 6 for them to be classed as UK residents for the 2023-2024 tax year.

This means that UK domiciled players will be taxed on their worldwide income, regardless of where it originates. It’s therefore important for them to break their UK tax residence on the day of departure by claiming split-year treatment.

One of the criteria to qualify for split-year treatment is under the “starting full time work overseas” claim. To do so, players must meet other conditions, including the need to continue working full time overseas for the following full tax year. This means they must remain overseas, either with the Saudi club or another club based abroad, until at least summer 2025.

That shouldn’t be a problem for players who have signed multi-year contracts. But it may be a bit more precarious for managers—think Steven Gerrard—who have joined Saudi Pro League clubs where their positions are very much results-dependent.

Another key component of the SRT is the number of days the player is allowed to spend in the UK each tax year after their departure. They would need to spend fewer than 91 days in the UK per tax year, pro rata for the year of departure—approximately 60 for those who left in August.

The number of available days may also be lower in some circumstances where a player leaves the UK, but their family remains. This may affect plans to return to the UK in the off-season, during international breaks, or even if they need to return to the UK to play for their national team.

Non-UK domiciled players who have left the Premier League to join Saudi clubs shouldn’t be impacted as much because they can claim the remittance basis of taxation. In such a case, if they fall afoul of the SRT rules and remain UK tax resident, tax will only be charged on UK source income and overseas income if it’s brought into the UK.

If they don’t remit the Saudi earnings to the UK, then no UK tax would be charged on this income. If the player doesn’t return to the UK, then they’ll meet the conditions to claim the split-year treatment.

Soccer players often generate substantial income from off-field activities such as image rights and other commercial endorsements. If income continues to be paid into a UK incorporated image rights company, then UK corporation tax will continue to be charged on the company’s profits.

However, the move abroad could provide an opportunity to unwind their company without paying UK tax. To do so, the player would need to be non-UK resident for five or six years.

One final point to consider is whether a player receives a sign-on bonus. This would be taxable based on their residence position at the time of payment. If received before they break their UK tax residency, the full amount would be liable to UK income tax.

UK tax rules are complex, and a simple miscalculation of days spent in the UK could result in huge tax bills being triggered inadvertently. Because the soccer season and transfer windows straddle tax years, players should seek good advice and keep meticulous records of the dates they spend in the UK if they want to ensure that their salaries maintain their tax-free status.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Chrissy Leach is a chartered accountant and senior associate in Irwin Mitchell’s private client services team and part of the firm’s sport, media, and entertainment sector.

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