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Usain Bolt's comment about UK tax laws.


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Old 15-08-2012, 07:46
walterwhite
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Foreigners are not liable for UK income tax unless they reside in the UK.

They pay their income tax in their country of residence.

UK government may recover any tax difference between what they pay in their own country and what they would have paid were they resident in the UK.

Key point is that they have to have earned that money in the UK in the first place, so taxing it is fair enough.
But Usain Bolt hasn't earned that money in the UK, that's the whole point. It's like saying that if I go on holiday to the U.S. for 2 weeks then i've earned 2/52 of my yearly wages there, of course I haven't.
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Old 15-08-2012, 09:09
Inkblot
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I wonder what the moral argument is for this?
The moral argument is that if a sponsor is paying you to promote them in the UK, then you pay tax on the money you earn for promoting them. If you didn't get paid for promoting them in this country you shouldn't have to pay tax in this country.

Morally it's completely justified. Pragmatically, most people would say that if it discourages sportsmen and women from appearing here it's a bad policy. But purely on moral grounds, if you agree to do a job in exchange for a large sum of money, why should you be exempt from tax in the country where you do that job?
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Old 15-08-2012, 09:24
TommyNooka
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But Usain Bolt hasn't earned that money in the UK, that's the whole point. It's like saying that if I go on holiday to the U.S. for 2 weeks then i've earned 2/52 of my yearly wages there, of course I haven't.
I'm no expert on this but the way I see it is if for example Usain Bolts image is used in Puma shops all over the UK then he is being used to sponsor a product and I very much doubt the UK government will have received any tax for that. Taxing the athletes when they perform here may look unfair but the athlete has potentially received millions for allowing their picture to be used in this country and might not have paid a penny in tax.
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Old 15-08-2012, 11:05
BrokenArrow
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The moral argument is that if a sponsor is paying you to promote them in the UK, then you pay tax on the money you earn for promoting them. If you didn't get paid for promoting them in this country you shouldn't have to pay tax in this country.

Morally it's completely justified. Pragmatically, most people would say that if it discourages sportsmen and women from appearing here it's a bad policy. But purely on moral grounds, if you agree to do a job in exchange for a large sum of money, why should you be exempt from tax in the country where you do that job?
You pay tax in the country that you are resident, you don't pay tax in every country in the world just because your face is on a Loriel advert in local train stations.
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Old 15-08-2012, 11:12
flagpole
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The point of the law is that they are earning both prize money and sponsorship income when competing in the UK. Sponsors will require them to do things like - wear their gear, pop up on TV ads and do photo shoots etc in the UK as part of their sponsorship deal. On that basis the UK government consider that a proportion of their sponsorship income is earned in the UK and taxable here.
they are clearly right too.
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Old 15-08-2012, 11:14
johnF1971
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I'm no expert on this but the way I see it is if for example Usain Bolts image is used in Puma shops all over the UK then he is being used to sponsor a product and I very much doubt the UK government will have received any tax for that. Taxing the athletes when they perform here may look unfair but the athlete has potentially received millions for allowing their picture to be used in this country and might not have paid a penny in tax.
I would have thought the way round this would be for Puma (or whoever) to cover his UK tax expenses. After all it is they who will ultimately benefit from him endorsing their products in the UK.
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Old 15-08-2012, 11:20
johnF1971
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The point of the law is that they are earning both prize money and sponsorship income when competing in the UK. Sponsors will require them to do things like - wear their gear, pop up on TV ads and do photo shoots etc in the UK as part of their sponsorship deal. On that basis the UK government consider that a proportion of their sponsorship income is earned in the UK and taxable here.
Well I guess Bolt's current Puma contract does not require him to appear in the UK, because he doesn't!

Presumably if Puma did decide they wanted more exposure in the UK they would draw up a new contract with Bolt which would require him to compete here for so many events a year, and which would be for more money, so that it would be financially worth his while overall?
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Old 15-08-2012, 11:49
BrokenArrow
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I'm no expert on this but the way I see it is if for example Usain Bolts image is used in Puma shops all over the UK then he is being used to sponsor a product and I very much doubt the UK government will have received any tax for that. Taxing the athletes when they perform here may look unfair but the athlete has potentially received millions for allowing their picture to be used in this country and might not have paid a penny in tax.
That same image will be used in every country in the world, that does not mean every country in the world has a right to take a cut of his income.
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Old 15-08-2012, 11:51
Inkblot
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You pay tax in the country that you are resident, you don't pay tax in every country in the world just because your face is on a Loriel advert in local train stations.
But the specific moral case still holds. If you work in a country, you earn money in that country, you should pay tax in that country. We're not talking about a photo on a poster, we're talking about the man doing a paid job - promoting his sponsors - whilst in the country. As others have said, if his sponsors benefit from his work whilst he's here, maybe they should compensate him for the tax he pays whilst he's here.
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Old 15-08-2012, 11:58
mills705
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I now know why Britain has very few large track and field meets every year.
In the 90's when I was younger, Gateshead Stadium was quite a mecca for the international track and field scene with Johnathon Edwards competing, Carl Lewis and Colin Jackson etc. This has subsequently died right off and even I noticed it when I was growing up. We stopped going!
This stupid tax law is preventing us from seeing top quality athletics due to the fact the Govt. is trying to rob them of even more money than they make!

So much for being able to inspire a generation!
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Old 15-08-2012, 12:05
BrokenArrow
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But the specific moral case still holds. If you work in a country, you earn money in that country, you should pay tax in that country. We're not talking about a photo on a poster, we're talking about the man doing a paid job - promoting his sponsors - whilst in the country. As others have said, if his sponsors benefit from his work whilst he's here, maybe they should compensate him for the tax he pays whilst he's here.
No that's not the way it works.

I have been paid for work I've done in other countries, I sell goods in other countries.

I pay UK income and other taxes, I have never paid local taxes in those other countries, that's not the way it works.

If I went and stayed and worked in those countries for more than 6 months then I would pay the local taxes and not the UK ones.
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Old 15-08-2012, 12:11
Inkblot
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No that's not the way it works.

I have been paid for work I've done in other countries, I sell goods in other countries.

I pay UK income and other taxes, I have never paid local taxes in those other countries, that's not the way it works.

If I went and stayed and worked in those countries for more than 6 months then I would pay the local taxes and not the UK ones.
I understand that. I was answering a specific question about whether it was morally right to tax people on money they earned promoting their sponsors in this country. It may be a bad policy and unfair for the reason you explain, but morally it's not so clear-cut.
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Old 15-08-2012, 12:14
swnymor1963
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That same image will be used in every country in the world, that does not mean every country in the world has a right to take a cut of his income.
...and that`s it...they don`t...if you read the 1st link in post 10 it`s only the USA(35% tax) and the UK(50% tax) that tax the sponsorship earnings of non residents.....Sadly I`am old enough to remember the brain drain of the 1970`s when top earners were paying an eye watering 98%...When Maggie Thatcher came into power she reduced the top rate of tax from 80+% to 60% in order to try reverse the exodus

http://www.sportandrecreation.org.uk...orsment-income
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Old 15-08-2012, 12:28
DariaM
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Bolt is more than happy to move to (say) Switzerland to join other Tax Exiles, such as Lewis Hamilton.

Quite Pathetic Frankly.
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Old 15-08-2012, 13:06
walterwhite
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I'm no expert on this but the way I see it is if for example Usain Bolts image is used in Puma shops all over the UK then he is being used to sponsor a product and I very much doubt the UK government will have received any tax for that. Taxing the athletes when they perform here may look unfair but the athlete has potentially received millions for allowing their picture to be used in this country and might not have paid a penny in tax.
They are completely unrelated though. On that basis Usain Bolt should be paying tax to every country in the world where his adverts are shown.
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Old 15-08-2012, 13:07
walterwhite
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But the specific moral case still holds. If you work in a country, you earn money in that country, you should pay tax in that country. We're not talking about a photo on a poster, we're talking about the man doing a paid job - promoting his sponsors - whilst in the country. As others have said, if his sponsors benefit from his work whilst he's here, maybe they should compensate him for the tax he pays whilst he's here.
That isn't happening. He's here competing, not doing promotional work.
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Old 15-08-2012, 13:37
natalian
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That isn't happening. He's here competing, not doing promotional work.
The two go together. He competes by running for 10 seconds from one end of the stadium to the other. However, while he is doing that he is wearing his sponsor's shoes, socks, trousers. At the start line he will be wearing his sponsor's jacket. At the press conference afterwards he will say something along the lines of how he could not possibly ever have achieved his medal if it wasn't for the super fast shoes his sponsors have provided. He will pose for a picture with his medal in his sponsor's gear outside the Olympic stadium that will be plastered all over the world the following day.

Basically, he is working and earning money in the UK. If you work and earn money in most places you pay tax there.
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Old 15-08-2012, 13:38
natalian
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No that's not the way it works.

I have been paid for work I've done in other countries, I sell goods in other countries.

I pay UK income and other taxes, I have never paid local taxes in those other countries, that's not the way it works.

If I went and stayed and worked in those countries for more than 6 months then I would pay the local taxes and not the UK ones.
In most countries in the world you will pay tax on any income that you earn in that country regardless of how long you are there. As a UK resident you are taxable in the UK on your worldwide income, but if you happened to spend a week working in the US and earning money there then the US would want to tax you on what you earned while in the US....just as we do when the Americans come over here!
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Old 15-08-2012, 13:39
walterwhite
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The two go together. He competes by running for 10 seconds from one end of the stadium to the other. However, while he is doing that he is wearing his sponsor's shoes, socks, trousers. At the start line he will be wearing his sponsor's jacket. At the press conference afterwards he will say something along the lines of how he could not possibly ever have achieved his medal if it wasn't for the super fast shoes his sponsors have provided. He will pose for a picture with his medal in his sponsor's gear outside the Olympic stadium that will be plastered all over the world the following day.

Basically, he is working and earning money in the UK. If you work and earn money in most places you pay tax there.
You pay tax on what you earn in the country, not what you earned elsewhere.
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Old 15-08-2012, 13:42
natalian
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They are completely unrelated though. On that basis Usain Bolt should be paying tax to every country in the world where his adverts are shown.
Not really. Usain Bolt is paid for appearing in the advert. That work is done wherever the advert is filmed. If that happens to be in the UK then he is liable to UK tax on that income. However, it is highly unlikely that he owns the intellectual property in the advert itself. When that advert is shown all over the world that will probably be arranged by his sponsor.
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Old 15-08-2012, 13:43
natalian
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You pay tax on what you earn in the country, not what you earned elsewhere.
Precisely, that is why he is only taxable on a proportion of his sponsorship income, not all of it.
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Old 15-08-2012, 13:44
walterwhite
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Not really. Usain Bolt is paid for appearing in the advert. That work is done wherever the advert is filmed. If that happens to be in the UK then he is liable to UK tax on that income. However, it is highly unlikely that he owns the intellectual property in the advert itself. When that advert is shown all over the world that will probably be arranged by his sponsor.
The whole point is the work wasn't done in the UK. If he advertises a Jamaican product on Jamaican tv and never mentions it when he's in the UK and it's never seen in the UK he still gets taxed on it here. How is that fair?
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Old 15-08-2012, 14:09
natalian
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The whole point is the work wasn't done in the UK. If he advertises a Jamaican product on Jamaican tv and never mentions it when he's in the UK and it's never seen in the UK he still gets taxed on it here. How is that fair?
The purpose of the legislation is to subject foreign sportsmen to a charge to tax on profits on gains obtained in connection with their commercial activities in the UK (Lord Scott of Foscote in Agassi v Robinson). If Bolt can demonstrate that no part of his sponsorship and endorsement income arises in connection with his commercial activites in the UK then it should not be taxable in the UK. Without a detailed understanding of the specific terms of all of Bolt's sponsorship and endorsement contracts then it is impossible to say whether the position he states that he is in is fair or not.
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Old 15-08-2012, 14:23
flagpole
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The whole point is the work wasn't done in the UK. If he advertises a Jamaican product on Jamaican tv and never mentions it when he's in the UK and it's never seen in the UK he still gets taxed on it here. How is that fair?
that is not what happens though.

he is not sponsored by Wynter's Auto Spares & Repairs Ltd, 106 Kingston, Jamaica. he is sponsored by multinational companies like puma who pay him $15m a year.

he also wouldn't be taxed in the situation you describe here.
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Old 15-08-2012, 14:28
BrokenArrow
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In most countries in the world you will pay tax on any income that you earn in that country regardless of how long you are there. As a UK resident you are taxable in the UK on your worldwide income, but if you happened to spend a week working in the US and earning money there then the US would want to tax you on what you earned while in the US....just as we do when the Americans come over here!
I didn't, its common for short term contract work just to lump it in your overall earnings and pay tax on it in the UK at the end of the year.

I have known colleagues that don't pay much tax, they have it paid into Jersey offshore accounts and never bring it into the UK, they claim for the first 38K so as not to pay the 40% tax.

The money is earned outside the UK never enters the UK and pays Jersey tax on the interest earned.

A nice little holiday to France via Jersey once a year.

Its not strictly legal I suppose but its the Govs fault for charging way too much tax in the first place.

The legal way to avoid excessive tax is having a Ltd Company and paying yourself and wife 38K each and take the rest in dividends.
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