Prize money in sport ...

[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.

[Doug Ramage]

Post by 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.

Yes, if it's their trade/profession.

[Peter]

Post by Doug Ramage

Post by Ronnie Davis
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?

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.

[Jonathan Bryce]

Post by Peter

Post by Doug Ramage
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.

What would be the point of this?

[tim]

Post by Jonathan Bryce

Post by Peter

Post by Doug Ramage
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.

What would be the point of this?

tax avoidance..... were it to work

tim

[Doug Ramage]

Post by Jonathan Bryce

Post by Peter

Post by Doug Ramage
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.

What would be the point of this?

To avoid IHT and/or Income Tax, I assume?

[Tim]

Post by Doug Ramage

Post by Ronnie Davis
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?

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?! ;-)

[Ronald Raygun]

Post by Tim

Post by Doug Ramage

Post by Ronnie Davis
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?

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?! ;-)

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.

[tim]

Post by Doug Ramage

Post by 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.

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

[Doug Ramage]

Post by tim

Post by Doug Ramage

Post by 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.

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

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

[Tim]

Post by Doug Ramage
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?? :-))

[Ronald Raygun]

Post by Tim

Post by Doug Ramage
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?? :-))

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.

[Doug Ramage]

Post by Ronald Raygun

Post by Tim

Post by Doug Ramage
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?? :-))

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. :)

[Tim]

Post by Doug Ramage

Post by Ronald Raygun
Before people get the Nobel Prize, they
don't "work for" the dynamite fund.
They just ... grinding at their grindstone... :-)

;-)

Post by Doug Ramage

Post by Ronald Raygun
But to answer your question, yes. The quid
won't be taxed unless it's a quid pro quo.

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(!) ...

[Doug Ramage]

Post by Tim

Post by Doug Ramage

Post by Ronald Raygun
Before people get the Nobel Prize, they
don't "work for" the dynamite fund.
They just ... grinding at their grindstone... :-)

;-)

Post by Doug Ramage

Post by Ronald Raygun
But to answer your question, yes. The quid
won't be taxed unless it's a quid pro quo.

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?

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

Post by Tim
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.

[Ronald Raygun]

Post by Doug Ramage
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.

[Doug Ramage]

Post by Ronald Raygun

Post by Doug Ramage
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.

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. :(

[Ronald Raygun]

Post by Doug Ramage
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.

[Doug Ramage]

Post by Ronald Raygun

Post by Doug Ramage
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?

Unfortunately, 'cos the House of Lords said so in the case of Sharkey v.
Wernher. :(

Post by Ronald Raygun
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.

True.

[Ronald Raygun]

Post by Doug Ramage

Post by Ronald Raygun

Post by Doug Ramage
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?

Unfortunately, 'cos the House of Lords said so in the case of Sharkey v.
Wernher. :(

Pah! What do they know? Bunch of old fuddy-duddies. :-)

Who's to say you didn't buy the stock personally and only transferred
it into the business immediately prior to selling to punters? Then the
business would make zero profit, but the trader personally would be
taxed on the profit inherent in transferring the stock *into* the
business at market value.

[Tim]

Post by Ronald Raygun

Post by Doug Ramage
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.

The bubbly can come from one of his clients!

[Ronald Raygun]

Post by Tim

Post by Ronald Raygun

Post by Doug Ramage
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.

The bubbly can come from one of his clients!

Good point. My brother-in-law keeps getting gifts from his
private patients.

[Tim]

Post by Doug Ramage

Post by Tim

Post by Doug Ramage
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?

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

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

Post by Doug Ramage

Post by Tim
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.

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

[Doug Ramage]

Post by Doug Ramage

Post by Doug Ramage

Post by Tim

Post by Doug Ramage
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?

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

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

Post by Doug Ramage

Post by Tim
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.

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?

[Tim]

Post by Doug Ramage

Post by Doug Ramage

Post by Doug Ramage

Post by Tim
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 ...
Do you think that this is wrong?

No, that is correct, as it seems like

Employee Incentive/Award type scheme.
Hardly - all the workers were *self-employed* !!

Post by Doug Ramage
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?

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

No idea - but it was the client (donor of bubbly) who pointed out to the
(self-employed) workers that the bubbly should be declared to I.R.!

[rob.]

Post by Doug Ramage
The Nobel prizes are tax exempt in the
UK, IIRC, due their being unsolicited.

If someone say, won the lottery, and decided to make a few large gifts to
friends and family - would there be a liability there?

[tim]

Post by rob.

Post by Doug Ramage
The Nobel prizes are tax exempt in the
UK, IIRC, due their being unsolicited.

If someone say, won the lottery, and decided to make a few large gifts to
friends and family - would there be a liability there?

Not for income tax. It's a potentially excempt transfer for IHT.

next question:-)

tim