Prize money in sport ...


R

Ronnie Davis

Just curious really .....

When sportsmen and women win prize money in sport, doe they have to pay tax
on their winnings and if so, how much?

e.g. Snooker player wins £260,000 for winning the World Championship. is
this subject to tax or any other deductions? Do sports people in general
have ways in which they dont have to pay a lot out in tax/deductions?

Many thanks,

Ron.
 
Ad

Advertisements

D

Doug Ramage

Ronnie Davis said:
Just curious really .....

When sportsmen and women win prize money in sport, doe they have to pay
tax
on their winnings and if so, how much?

e.g. Snooker player wins £260,000 for winning the World Championship. is
this subject to tax or any other deductions? Do sports people in general
have ways in which they dont have to pay a lot out in tax/deductions?

Many thanks,

Ron.
Yes, if it's their trade/profession.
 
P

Peter

When sportsmen and women win prize money in sport, doe they have to pay
Yes, if it's their trade/profession.

Pity it's not possible for a parent to run a lottery with their
children as the only players.
 
T

Tim

Yes, if it's their trade/profession.
So if they are a full-time butcher/baker/candlestick maker, and just win the
World Championship as a "sideline" - are you saying that they'll get away
without paying tax?! ;-)
 
R

Ronald Raygun

Tim said:
So if they are a full-time butcher/baker/candlestick maker, and just win
the World Championship as a "sideline" - are you saying that they'll get
away without paying tax?! ;-)
Of course. Why do you think there are so many "amateur" competitions,
such as, erm, the Olympics?

I don't even think having a full-time (or even part-time) other job
is necessary to have prize winnings recognised as non-professional.
Each case would turn on the facts, and those facts would determine
whether the pursuit of winnings was professional in nature.

Damned if I know how they'd reach their conclusion, though. I guess
that's why the put wise (wo)men on the bench, not engineers or
mathematicians.
 
J

Jonathan Bryce

Peter said:
Pity it's not possible for a parent to run a lottery with their
children as the only players.
What would be the point of this?
 
T

tim

Doug Ramage said:
Yes, if it's their trade/profession.
So, is the money (IIRC 1 million dollars) that goes with a Nobel prize
also taxable on the same basis? (this certainly affects the science prizes)

tim
 
D

Doug Ramage

tim said:
So, is the money (IIRC 1 million dollars) that goes with a Nobel prize
also taxable on the same basis? (this certainly affects the science
prizes)

tim
The Nobel prizes are tax exempt in the UK, IIRC, due their being
unsolicited.
 
T

Tim

The Nobel prizes are tax exempt in the
UK, IIRC, due their being unsolicited.
Hmmmm. Does that mean that if I do some work for someone for "free", and
they later give me some money "unsolicited" - that I don't have to pay tax
on it?? :))
 
R

Ronald Raygun

Tim said:
Hmmmm. Does that mean that if I do some work for someone for "free", and
they later give me some money "unsolicited" - that I don't have to pay tax
on it?? :))
That's hardly a valid analogy. Before people get the Nobel Prize, they
don't "work for" the dynamite fund. They just bimble along grinding at
their grindstone, keeping a low profile while excelling in their field.
:) It's an entirely unexpected honour, like being knighted.

But to answer your question, yes. The quid won't be taxed unless
it's a quid pro quo. Under self-assessment, you are your own
assessor, and if you say it isn't pro quo, then in the first instance
it isn't. But there'll be hell to pay if they find out you lied.
 
D

Doug Ramage

Ronald Raygun said:
That's hardly a valid analogy. Before people get the Nobel Prize, they
don't "work for" the dynamite fund. They just bimble along grinding at
their grindstone, keeping a low profile while excelling in their field.
:) It's an entirely unexpected honour, like being knighted.

But to answer your question, yes. The quid won't be taxed unless
it's a quid pro quo. Under self-assessment, you are your own
assessor, and if you say it isn't pro quo, then in the first instance
it isn't. But there'll be hell to pay if they find out you lied.
There have been cases where unsolicited "gifts" (especially to Chartered
Accountants) were held not to be taxable - being unsolicited and not
payment for past services. :)
 
T

Tim

;-)

"Doug Ramage" wrote
There have been cases where unsolicited "gifts" (especially
to Chartered Accountants) were held not to be taxable -
being unsolicited and not payment for past services. :)
That's interesting. In the past, I have done work for a company where the
company have given some workers bottles of bubbly, simply for doing the best
quality work out of the group. I was told that anyone receiving a bottle of
bubbly this way would have to declare the "gift" on their tax return & pay
the appropriate tax - as though it was part of their remuneration. Do you
think that this is wrong?

The bottle's of bubbly were totally unexpected/unsolicited - unless you
happened to be an incredibly good quality worker ;-) and so had a much
better chance of being awarded one(!) ...
 
D

Doug Ramage

Tim said:
That's interesting. In the past, I have done work for a company where the
company have given some workers bottles of bubbly, simply for doing the
best
quality work out of the group. I was told that anyone receiving a bottle
of
bubbly this way would have to declare the "gift" on their tax return & pay
the appropriate tax - as though it was part of their remuneration. Do you
think that this is wrong?
No, that is correct, as it seems like Employee Incentive/Award type scheme.
The bottle's of bubbly were totally unexpected/unsolicited - unless you
happened to be an incredibly good quality worker ;-) and so had a much
better chance of being awarded one(!) ...
It is much more difficult for employees to avoid a tax liablity in these
circumstances, compared to the self-employed.
 
R

Ronald Raygun

Doug said:
It is much more difficult for employees to avoid a tax liablity in these
circumstances, compared to the self-employed.
How would a self-employed person award himself a bottle of bubbly
other than via drawings (which are not taxbale in any case)?
Nobody can pat himself on the back and call it an expense.
 
D

Doug Ramage

Ronald Raygun said:
How would a self-employed person award himself a bottle of bubbly
other than via drawings (which are not taxbale in any case)?
Nobody can pat himself on the back and call it an expense.
I was thinking in terms of unsolicited awards for the self-employed -
literary etc - rather than booze. :)

Note, if awarded to himself from stock (off-licence), he would be taxed at
market value not cost. :(
 
T

Tim

No, that is correct, as it seems like Employee Incentive/Award type
scheme.

Hardly - all the workers were *self-employed* !!
It is much more difficult for employees to avoid a tax liablity
in these circumstances, compared to the self-employed.
Ah, so now that you know they were all self-employed - does it make a
difference to your answer?
 
T

Tim

Doug said:
How would a self-employed person award himself a bottle of
bubbly other than via drawings (which are not taxbale in any case)?
Nobody can pat himself on the back and call it an expense.
The bubbly can come from one of his clients!
 
R

Ronald Raygun

Doug said:
Note, if awarded to himself from stock (off-licence), he would be taxed at
market value not cost. :(
Not only is that harshly unfair, but it also seems illogical except
where the off-licence is a separate legal entity (i.e. Ltd Co). If
he's a self-employed shopkeeper, then surely the merchandise *is
already* his. Why should he be obliged to sell it to himself, thus
generating unnecessary profit?

VAT is a separate issue, of course, and since the stock will have
had input VAT relief, he'd have to sell it to himself at cost+VAT.
 
Ad

Advertisements

D

Doug Ramage

Tim said:
scheme.

Hardly - all the workers were *self-employed* !!


Ah, so now that you know they were all self-employed - does it make a
difference to your answer?
Possibly.

Is the donor of the Bubbly claiming it as an allowable expense?
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads


Top