UK tax complexities highlighted by budding tennis star
08 July 2019
Cori “Coco” Gauff has captured the hearts of the tennis world at Wimbledon with her impressive performances, but the downside is the UK tax system which takes more in tax from players’ winnings than the IRS does.
According to Forbes, Gauff had made $61,101 on the court in 2019 prior to Wimbledon and she will more than triple that in London. Off the court, Gauff has a set of lucrative endorsement deals from New Balance, Head and Barilla and is set to make $1,000,000 in retainers off these deals in 2019.
At the most basic level, the first £37,500 ($47,400) of Gauff’s income will be taxed at 20% and according to Forbes, the effective rate on that income in the US would be 13.26%. Income over £37,500 is taxed at 40% in the UK and any income over £150,000 (about $189,600) is taxed at 45%. Forbes estimates that overall, her tournament winnings will be taxed in the UK at an effective rate of 36.52%, whereas her effective US rate on that income would only be 23.9%.
In addition to her winnings, HMRC will also take a piece of her endorsement earnings. At this point, the US and UK are the only countries who tax the endorsement income of foreigners. The UK taxes endorsement retainers (guaranteed annual payments to players without regard to performance) by taking the ratio of tournament and practice days a player has in the UK during the year to total tournament and practice days worldwide.
Read the full article from Forbes.