The concept of domicile has long been a cornerstone of the UK tax regime, providing a framework for determining individuals’ liability to UK tax on worldwide income and gains, says Morag Ofili, barrister – partner at the Edwin Coe tax team.
For highly mobile individuals, such as professional footballers, domicile has served as a crucial determinant in shaping their tax obligations and planning strategies
This piece will discuss how the end of domicile creates unique tax challenges for footballers.
The Current Role of Domicile in Taxation
In the UK, domicile is distinct from tax residency. While residency determines where an individual is taxed based on where they spend time or maintain ties, domicile relates to the individual’s long-term intentions and origin.
Domicile status underpins key tax benefits for non-domiciled individuals (non-doms). Over 60% of Premier League players are foreign nationals, making the benefits of the concept of domicile a cornerstone of tax planning in the industry. It can assist with:
Remittance Planning: A non-domiciled player living in the UK can avoid UK tax on income and gains earned abroad, provided they are not remitted to the UK. This is critical for players with endorsements, investments, or image rights contracts structured internationally.
Inheritance Tax: Non-domiciled players may also limit their exposure to UK inheritance tax on worldwide assets, a consideration for those with significant wealth spread across multiple jurisdictions.
The new regime
The abolition of the concept of domicile and its associated benefits means that anyone resident in the UK will be taxed on their worldwide income and gains. Without the concept of domicile, footballers may face:
Full Worldwide Taxation: UK residency could automatically trigger full tax liability on their global earnings, irrespective of their long-term plans or connection to the UK.
Complex Double Tax Relief Issues: Frequent cross-border moves mean a higher risk of double taxation on worldwide income and gains, requiring reliance on reliefs that vary in scope and generosity across jurisdictions.
The Government has, however, introduced mitigations designed to soften the blow for new arrivals.
The FIG Regime
One of the more favourable changes is the Foreign Income and Gains (FIG) Regime, which will allows individuals newly arriving in the UK to pay no on their foreign income and gains for their first four years of residence, however, this will not apply to sportspersons or entertainers.
Trusts and the End of Protected Settlements
The abolition of the “protected settlement” rules is a major shift for players who use trusts to hold international assets. From 6 April 2025:
Worldwide Taxation: Settled trust income and gains will be taxed in full after the player’s first four years of UK residence.
Loss of Certainty: Pre-existing trusts are no longer insulated, requiring settlors to reassess tax exposures and potentially restructure their holdings.
Overseas Workday Relief (OWR)
The revised OWR provides an exemption for non-UK employment income earned during the first four years of UK residence. However, this is capped at the lower of 30% of worldwide earnings or £300,000 per tax year. For footballers with significant overseas earnings from tournaments, sponsorships, and image rights, the cap presents a clear limitation – elite players will quickly exceed the cap, leaving the remainder of their foreign income fully exposed to UK tax.
Rebasing, Temporary Repatriation, and the CGT Landscape
The Government’s transitional rules aim to ease the shift from the current remittance regime to worldwide taxation. However, these measures may also introduce new complexities for footballers:
Capital Gains Tax (CGT) Rebasing: Players who have relied on the remittance basis can rebase personal assets to their value as of 6 April 2017, reducing CGT liability on gains accrued before that date. This rule benefits players with valuable international investments but is tempered by the recent increase in the top CGT rate from 20% to 24%.
Temporary Repatriation Facility (TRF): The TRF allows players to repatriate foreign income and gains accumulated under the remittance regime at a reduced tax rate—12% initially, rising to 15% in later years.
This creates an incentive for footballers to:
Reorganise Wealth: Bring offshore funds to the UK while rates are favourable.
Re-evaluate Investment Strategies: Use repatriated funds to invest locally, potentially increasing their UK tax footprint.
However, those with substantial offshore earnings may still hesitate, particularly if they anticipate leaving the UK before exhausting the benefits of repatriation.
Inheritance Tax (IHT)
The shift to a residence-based IHT regime represents one of the most significant changes.
Residence-Based IHT
Under the new rules, IHT will apply to:
UK Assets Only: For the first 10 years of UK residence, only UK-based assets are subject to IHT.
Worldwide Assets: After 10 years, all assets, regardless of location, fall within the scope of IHT.
Elite players who were considered non-domicile prior to the announces changes and with significant assets held outside the UK may want to consider:
Limiting UK residence to less than a decade to avoid global IHT exposure.
Reviewing asset transfers and trust structures well before reaching the 10-year threshold.
The IHT Tail
Even after leaving the UK, footballers may face an extended “tail” of IHT liability. The tail lengthens with each year of UK residence, creating a cumulative impact for long-term residents. This means that footballers who leave the UK may remain exposed to UK IHT on their global estate for many years.
The IHT tail increases the risk of double taxation and relief through double taxation treaties may not fully mitigate the impact as not all countries have IHT treaties with the UK.
What’s at Stake?
While the aim of such a reform may be to increase fairness and revenue, the unintended consequence could be a less competitive Premier League and greater complexity for international talent:
Impact on UK Football’s Global Competitiveness: The UK’s position as a leading footballing destination depends on attracting top talent. A harsher tax regime could make the Premier League less appealing, particularly when compared to tax-favourable jurisdictions like Spain) or Italy . This could lead to a talent drain, reducing the league’s quality and global viewership.
Increased Tax Costs for Clubs and Players: Clubs often structure contracts and bonuses with tax efficiency in mind, particularly for international players. The abolition of domicile may make it harder to attract foreign talent, as the UK tax burden could no longer be mitigated through remittance planning.
Players may demand higher salaries to offset increased tax liabilities, raising costs for clubs.
Global Mobility Challenges: Footballers often maintain multiple homes and income streams, from match fees to image rights and sponsorships. With the removal of domicile, any period of UK residency—even a brief stint—could create worldwide tax exposure, discouraging short-term loans or transfers to the UK.
Impact on Image Rights and Sponsorship Deals: Internationally recognised players often hold their image rights through offshore companies. The abolition of domicile could result in these rights being taxed in the UK, reducing the net benefit for players and their advisors meaning contractual terms may need to be drafted with more care.
Broader Inheritance Tax Exposure: Without domicile rules, international players residing in the UK, even temporarily, could face UK inheritance tax on their global estates. For players with significant wealth tied up in properties, businesses, and assets abroad, this could have major implications for their financial planning.
Advisory Challenges: Tax advisors working with footballers would face heightened complexity in navigating cross-border issues, requiring even greater coordination between UK and international tax specialists.
How Players and Advisors Can Prepare
Whilst domicile will not be removed until 6 April 2025, preparation is key. Players should act now and:
Repatriate funds strategically while rates are favourable
Reassess Structuring: Evaluate the viability of existing structures, such as offshore image rights companies should they become subject to UK taxation.
Plan for IHT Exposure: Develop strategies to mitigate worldwide IHT liability, particularly for long-term residents.
Understand International Tax Relief: Stay up to date on double taxation treaties and relief mechanisms.
Engage Early: Seek expert advice to ensure compliance and minimise risks under the new regime.
Conclusion
Frequent international moves—whether for transfers, loans, or tournaments—mean that footballers can often meet residency thresholds in multiple jurisdictions. Under current rules, footballers playing for UK clubs while maintaining ties abroad often balance dual residency risks, however this is tempered by the domicile rules which reduce exposure to UK tax on international income.
The end of domicile within the UK tax system requires footballers and their advisers to rethink tried and tested tax planning to manage the dual pressures of career mobility and tax efficiency.
By Morag Ofili, barrister – partner at the Edwin Coe tax team