SAVIOUR: Bolt's appearance in London will help draw in the crowds
CHANCELLOR GEORGE Osborne has granted a “one-off” tax exemption for overseas athletes competing in this summer’s London Grand Prix. The move means Usain Bolt and other leading foreign stars will participate in the event, which would not have been the case if normal UK tax rules were enforced.
Bolt, the Olympic 100m and 200m champion, has not run in the UK since 2009 (excluding London 2012) – his reluctance to race in this country comes down to financial reasons. The sprinter commands an average appearance fee of $250,000 (£160,000), however, this figure is not the only taxable sum under Britain’s tax laws; Bolt’s global earnings would also be subject to tax, such as his lucrative sponsorship deals.
The tax exemption marks the first time any such arrangement has been made for a sporting event inside the UK that has not had a pre-existing one in its contract.
Organisers of the Grand Prix are keen to lure in as many spectators as possible, and the prospect of Bolt being present is bound to make demand soar. British Olympic gold medallists Mo Farah and Jessica Ennis have already agreed to take part.
Osborne, who had attended several meetings with London 2012 chairman Lord Coe prior to the decision, said: “The Government is determined to do everything possible to secure the Olympic legacy and I am delighted to grant this exemption.”
The event, which is part of the international Diamond League series, normally is hosted at Crystal Palace, but was relocated to the Olympic Stadium to mark the Games’ one-year anniversary.
Ricky Simms, Bolt’s London-based agent, was happy to learn of the chancellor’s decision to allow a tax reprise.
“It’s good news for the Diamond League meeting and British sport in general,” he said. “The rules were discouraging a lot of the top stars from competing in the UK when they had options elsewhere.
The tax concession was agreed upon mainly due to the projected benefits of welcoming international talent outstripping the loss of tax revenue; furthermore, the Olympic legacy and celebrating the anniversary weighed heavily upon Osborne’s decision.
Coe has been lauded for the pressure he put on the government to grant such a tax break, which affects only non-resident athletes and their appearance fees, prize money and sponsorship deals, which normally would be split for the taxman.
UK Athletics also welcomed the news. “We are delighted with the announcement from the Chancellor, which recognises the unique nature of this summer’s weekend of international athletics in the Olympic Stadium marking the first anniversary of London 2012”, the body said in a statement.
However, the government was criticised in some corners for failing to enact a long-term solution to its tax regime. Julian Hedley, head of sports and entertainment at accountancy firm Saffery Champness, said: “This is yet further evidence of the Treasury’s lack of foresight with regards to the benefits that major sporting events bring to the UK.
“We have calculated that the annual income tax collected on endorsement income from non-resident sportspeople is between £7m and £8m per annum, a tiny amount compared to the contribution sport makes to the UK Exchequer.
“In economic terms, the taxation foregone by removing the obligation to pay tax on worldwide endorsement income is vastly outweighed by the economic benefit from increased ticket sales, and associated revenues associated with huge crowds attending such an event”, he said.
“By abolishing the collection of income tax on a proportion of global endorsement income, the UK would fall into line with almost all other countries. Sportspeople would then know that they could compete in the UK without the fear of paying more in UK income tax than they would earn, which has been the case in the past for individuals like Bolt”, Hedley added.