Was the transfer window impacted by UK tax rules?
This summer’s transfer window again showed the purchasing power of the Premier League, with almost £3.5bn being spent on transfer fees. And, while there were players being bought from foreign teams, there was also a significant number of very high value transfers between Premier League clubs this summer, which is notable compared to previous transfer windows.
Given the Manchester City case, most people are now aware of the Premier League’s profit and sustainability rules (PSR), and it is clear that these have been relevant for recruitment at club level. However, could the abolition of the Remittance Basis in April 2025 have dissuaded overseas-based players from making the move to the UK?
Old tax rules
Previously, players at the top teams who played games in Europe could claim relief on those games under the Overseas Workday Relief (OWR) regime. As an example, if a player plays 10 per cent of their games overseas, then they could exempt 10 per cent of their salary from UK tax for the first three tax years (subject to certain conditions).
They also had a period of up to 15 years where non-UK income and gains (outside of their salary) could be sheltered from UK tax under the Remittance Basis, as long as these were not brought to the UK.
New regime
However, the new Foreign Income and Gains (or FIG) regime has rung in important changes since being introduced from 6 April 2025.
This regime provides a full exemption on non-UK income and gains, which is more generous than the Remittance Basis. However, the FIG regime is only available for four tax years which, given the way the transfer windows fall, would likely only last a player for three seasons.
While the period that OWR can be claimed has been extended to four tax years (from three), this is limited to a total amount of £300,000 per year. This is a significant sum for most people, but for players at the top teams who are earning in excess of this amount a week, it severely weakens the appeal of this relief.
Impact on players
The impact of these new rules means that there is a potentially more generous regime available for those who would not benefit from OWR, however for a much shorter period.
As such, for a player who may already have built significant wealth from their playing career, the FIG regime does not provide the mid-term tax benefits that the Remittance Basis afforded. For footballers, having consistency with their tax position is extremely important, especially as they only have a relatively short career to earn these levels of income.
This surely is a consideration for non-UK players when considering offers from the Premier League compared to, say, renegotiating a deal at their existing club.
Also, given that players who are currently playing in England are already caught by the UK tax system, is this a consideration for clubs looking to buy from other Premier League teams?
It is not a stretch to think that a newly recruited footballer from outside the UK will have an eye on the end of the FIG regime and be looking to move abroad after three seasons in the UK.
At the same time, we have also seen a rise in British players moving abroad, including to countries with attractive tax regimes such as Saudi Arabia and Italy.
While I don’t think there will be much public sympathy for highly paid footballers in the lead up to the Budget, could we see a relaxation of the recently introduced rules to keep the Premier League as the global force it has grown into, especially given the negative attention of the recent Manchester City case?
Adam Jefferies is a director at PKF Littlejohn.