Game on: How sports professionals can tackle the coronavirus cash-flow crisis
As governments around the world fight for public health, measures taken to combat the COVID-19 outbreak have fundamentally changed the way we live and work.
With social distancing taking its toll, few sectors have been hit harder than Europe’s sports industry, as Elliott Buss, sports specialist and partner at accountants UHY Hacker Young, explains:
“At the top, broadcasting, sponsorship and match day revenue affect everything, and this trickles down to the entire sports workforce; it is predicted that there will be $4bn in lost revenue across the ‘big five’ European football leagues alone.
“Some one-off events will have insurance cover, such as Wimbledon and the Olympics, but many clubs, be they rugby, cricket or football will not have adequate cover. USA Rugby has already declared bankruptcy as a result,” Buss continues.
This is a time of great uncertainty for all those who earn their money through sport, but the extent of the impact “will largely depend on where you are in your career,” Buss says.
“On the financial front, the ‘super earners’, such as Ronaldo, Messi et al. will largely be unaffected. But consider a 21-year-old rugby player who has just bought a first home based on the level of income several months ago, and who now has to take a 25% – 50% pay cut.
“The pressure becomes huge when added to the mental concerns; athletes may be worried if they’re doing adequate training at home, perhaps compared with their opposite number at the same club,” Buss adds.
In the UK, the government’s furlough scheme is helping employees and businesses to keep their heads above water, but what about Britain’s sports professionals, or those working within sport, many of whom are self-employed?
The Self-Employment Income Support Scheme (SEISS)
Pro athletes are being thrown a lifeline through the UK government’s new Self-Employment Income Support Scheme (SEISS).
The scheme offers a taxable grant designed to help self-employed individuals, such as professional sportsmen and women, who may be struggling due to loss of income during the coronavirus outbreak.
The grant can be worth up to 80% of your profits, but the amount you receive will depend on how much profit you’ve made over the last three years.
In order to qualify, you need to have filed a tax return for 2018/19, meaning you will need to have registered as self-employed before 6th April 2019.
“SEISS will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19,” Buss explains.
“The scheme will provide a grant worth 80% of profits up to a cap of £2,500 per month. HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant.
“The scheme will be open to those where the majority of their income comes from self-employment, and who have profits of less than £50,000. SEISS be open for an initial three months, with applicants able to make their first claim by the beginning of June,” Buss continues.
Payment will come in a lump sum to cover March, April and May 2020. The scheme is currently in place to cover three months, but this could be extended depending on how the situation develops.
How do I qualify for the SEISS grant?
Remember, that to qualify, you will need to have begun your self-employment prior to 6th April 2019. If this is not the case, you will not be eligible to receive help.
However, even if you missed the deadline for this tax year, you still have until Thursday 23rd April to submit your tax return and this will still allow you to qualify for the SEISS support.
Don’t forget, you can only qualify for the grant if your trading profit (pre-tax profits per accounts/tax return) is below £50,000 per year. If your average annual trading profit is above £50K, the SEISS won’t be available to you.
Commenting on the multiple potential sources of income, such as endorsements, sponsorship, appearance fees, etc. that sportsmen and women can receive, Buss says:
“Typically, endorsements and similar income streams will be channelled through a limited company rather than as a self-employed person, for tax reasons.
“There may be some purely self-employed athletes who have minimal prize money and endorsements (such as track and field) but whether their non-taxable sports grants mean that they cannot claim remains to be seen.
“Remember though, that more than 50% of total income has to come from self-employment,” Buss adds.
A significant plus point of SEISS, is that sports professionals are allowed to keep working while being on the scheme, and you don’t have to prove the coronavirus is hitting your ability to earn money.
How to apply for SEISS
If you are eligible for the scheme, then HMRC will get in touch with you.
“Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational,” Buss explains.
“HMRC will then pay the grant directly to eligible claimants’ bank accounts. HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by beginning of June 2020.
“For eligible individuals who have not submitted their returns for 2018-19, they will have four weeks’ notice from the date of the announcement to file their returns and therefore become eligible for this scheme,” he adds.
Further support and advice
For those who are still struggling, income tax payments due in July 2020 (under the self-assessment system) can be deferred until January 2021.
Other measures that can help your cash-flow include:
- Take a mortgage holiday
- Call HMRC helpline if tax is owed, on 0800 0159 559
- Take a personal loans/credit card payment holiday
- Seek a car finance deferral
- Submit a Tax Return for 2019-20 if looking at a refund. (Note that in rugby, the Japanese tax authorities withheld tax, so refund cases may exist).
“There is lots of help out there, such as Sky Sports holiday, and other schemes. It is also worth looking at all personal direct debits to see if they are necessary, and to find out if any help is available for each one,” Buss concludes.
As a professional athlete, your tax affairs are likely to be more complicated than the average person’s. For this reason, it is essential that you work with an accountant who has experience dealing with the kind of tax arrangements you may have to make.
At Play-Ex we understand that it can be difficult for professional athletes to access the services they need to organise everything from insurance and living arrangements, to tax affairs and employment contracts.
We have built the Play-Ex platform as a place for you to connect with trusted, experienced services to help organise your life. Sign up to Play-Ex today and find the tax advice you need in four simple steps.
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