FAQ�s Athlete Tax

These frequently asked questions should help you gain a better understanding of whether or not you need to be paying tax.

Will my Athlete Personal Award (Lottery Award) be taxed?
How do I know if I am a Professional Athlete?
But how do I know if I have to pay tax or not?
What if my sporting income exceeds my sporting expenses?
How do I know if I have to complete a tax return?
What information do I need to complete a tax return?
What expenses can I claim against my income?
I have heard that if I have high expenses, then I can claim a tax credit or get a refund?
What if I am not happy with the tax decisions made by HMRC?
I am still confused about what I need to do, where can I seek further advice?


Will my Athlete Personal Award (Lottery Award) be taxed?
In order for HMRC to determine whether you will pay tax on your Lottery Award they need to decide if you are a professional athlete. If you are a professional athlete your lottery award will become taxable.

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How do I know if I am a Professional Athlete?
If someone dedicates all their time to training and competing, does this make them a professional athlete? No, not in all circumstances. In the eyes of HMRC, you�re a professional athlete if your sporting activities amount to carrying out a trade or profession through your sport. Basically if you are trying to or do make a profit out of your sporting activity you are deemed to be a professional.

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But how do I know if I have to pay tax or not?
HMRC has decided that: If your sole income from sporting activities is your Lottery Award, you won�t be considered a professional athlete and so your Award will not be taxable.

However if you earn other incomes then you may be liable to tax. For example:

Prize winnings/participation fees � For a professional athlete this is taxable income and the profit element will depend on the level of allowable expenditure. Even if you are not deemed professional, it may be taxed as miscellaneous income.

Employment Income � If you have another job, other than working as an athlete, then this income would be taxable. Your employer may tax your income at source through a PAYE scheme, which means you have already paid your tax that is liable. However if you also then receive an income as an athlete, you would have to fill in a tax return and may have to pay more tax, (or possibly be entitled to a refund).

Sponsorship/endorsements � Sponsorship money may be taxable. As with prize winnings, it depends on whether you are regarded as a professional athlete, and even if you are not, it may be taxed as miscellaneous income.

Grants and gifts � Any other grants and gifts that are used to enhance performance may be taxable if you are a professional athlete.

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What if my sporting income exceeds my sporting expenses?

If your income from your sport exceeds your sporting expenses, the excess will be taxable if you are regarded as a professional athlete. This means that all your income from your sporting activities, including your Lottery Award, is taxable.

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How do I know if I have to complete a tax return?

If your sole income is the lottery award then you would not be seen as a professional athlete, so you would not have to complete a tax return. If you receive any other income as a result of your sporting activity then you may have to complete a tax return.

The BAC work with several professional advisers, who will be able to answer any questions you may have. Special rates for BAC members have also been negotiated for the completion of athlete tax returns.

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What information do I need to complete a tax return?

You need to keep a record of all your income and expenditure relating to your sporting activity. You may want to keep manual or electronic records of this information such as date, details of the income/expenditure and the amounts. This includes details of any bank or building society interest received. You need to ideally keep all your receipts and letters confirming any grants or lottery awards. If you have had any employment in a tax year, you need to keep a P60 for each employment which details how much you have earned and how much tax you have already paid. Information regarding bank interest received etc may also be required.

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What expenses can I claim against my income?

The expenses that relate directly to your sport (this might include for example purchasing personal sports equipment, training, personal sports travel costs, travel to your physio, sport related phone calls to your coach) are allowable deductions against your income for tax purposes. Substantial equipment (such as large pieces of gym equipment) may be included in tax relief as a capital expense.

The section "Information for athletes accountants" has full details of all the expenses you can claim, these have been approved by HMRC.

Remember that you must be able to prove to the Tax Office what you have spent the money on and that they relate to your sport.

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I have heard that if I have high expenses, then I can claim a tax credit or get a refund?

In certain circumstances this is correct.

A credit occurs when you are professional athlete ie trying to make a profit from what you do, but you have expenses greater than your APA and other income combined. If this is the case, and you have paid tax in the past, then you may receive a refund. Where you have not yet paid tax, you may be entitled to a credit against future taxable profits.

For athletes who do not meet the professional status, you will not be able to generate a credit or a refund.

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What if I am not happy with the tax decisions made by HMRC?

Decisions relating to your personal tax are entirely down to HMRC; of course if you do not agree with something then you and/or your accountant can argue the case. If you are in disagreement then the first thing to do is to contact your tax office/or one of our recommended advisers to query, discuss or seek clarification on any decisions they have made about your personal tax.

The bottom line is that HMRC�s decision on the taxation of your income, including whether or not you are a professional athlete, is the one that matters.

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I am still confused about what I need to do, where can I seek further advice?

We recommend that you speak to an accountant if you are still having problems and the Tax Office is not proving helpful.

Please call our recommended accountants, Granite Morgan Smith on 01376 574848

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