London: English Premier League footballers are reportedly using a major tax loophole to protect their multi-million pound salaries from the tax authorities.
According to the Independent, around 75 per cent of Premier League clubs are now using a scheme known as EFRBS (Employer Financed Retirement Benefit Schemes) to allow players to avoid up to 50 per cent of income tax.
The clubs, including Manchester City and Chelsea, are using EFRBS in order to make their offers to players even more attractive.
The completely legal scheme allows players to sacrifice up to 50 per cent of their wages at source to be placed in a trust that is set aside for their retirement, the paper said.
Pete Hackleton, an Associate Director at RSM Tenon and an expert in EFRBS, said that they had become a major feature in deals for top players in the last 18 months.
“We have worked with a number of Premier League and Championship clubs to set up EFRBS,” Hackleton said.
“EFRBS have been around for 15 to 20 years, but as image rights have become a hot topic for HMRC (Her Majesty’s Revenue and Customs) and with the increase to the top rate of income tax, people have looked for an alternative,” he added.
Meanwhile, the Inland Revenue has said in a statement it would 'ensure that funded EFRBS are less attractive than other forms of remuneration'.
“It will also continue to monitor changes in patterns of pension saving behaviour for all other forms of EFRBS on which it will be ready to act if necessary to prevent additional fiscal risk,” it added.