The current tax regime for athletes is acting as a disincentive to them looking for, or accepting, low to medium level sponsorship in the £0 -£10,000 range, because at present, when an athlete earns any money
from their sport over and above their lottery award, they are likely to be deemed to be a professional sportsperson in which event all their sporting income becomes taxable, including their Lottery Award. This
means that athletes need to earn significantly in excess of £10,000 in this way before it becomes worthwhile.
We feel that changing the way in which athletes are taxed would have a minimal cost impact on HM Treasury, but could have a significant number of benefits for athletes and sport. Exempting all lottery funded Athlete Personal Awards from income tax so that athletes would only need to worry about the tax treatment of any other income (including sponsorship) would significantly simplify the tax system for athletes and
reduce the amount of time HMRC has to spend on assessing individual athlete cases to recover relatively small amounts of income tax.
Increasing the number of sponsorship links athletes could create with the commercial sector could not only bring more money into sport but also enable athletes to forge longer term partnerships improving their skills
base and future employment prospects. Given that only a very small percentage of elite athletes make significant amounts of money from their sport, it is important that athletes plan ahead for life after sport.
Purpose of paper
To present the case for tax exemption for APAs, by showing the benefits this would bring to elite sport and athletes chances of success in 2012, and demonstrating the minimal effect this would have on the Treasury.
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