If you are a rugby player still engaged in professional sport, you could have many sources of income. Sign-on fees, your contracted salary, bonuses, and sponsorships could all make up an impressive remuneration package.
Similarly, you could have finished your playing career and be in a new role or even started your own business, still earning a living but under different circumstances.
Whatever your situation as a current or former rugby player, it is likely you will be required to complete a self-assessment tax return. Usually, you should complete a tax return if you are:
- Self-employed (either a sole trader or the owner of a larger business) and earning more than £1,000 a year
- A higher- or additional-rate taxpayer, in order to claim an additional 20% or 25% in pension tax relief (more on this later).
As you may already know, you need to declare your income for the 2021/22 tax year, which ended on 6 April 2022, before the deadline on 31 January 2023.
This can be a complex process, so it is important to start early, to avoid both the stress of getting everything together, as well as the danger of missing the deadline.
So, here are three efficient ways to prepare for your self-assessment tax return on 31 January.
1. Start early and be meticulous
If you have not yet thought about starting your self-assessment tax return, now is the time to begin. According to Simply Business, 2 million self-employed earners missed the deadline in 2022, leading to financial penalties.
Late form submissions may mean your bill accrues interest set by HMRC, and there are also fixed late filing penalties depending on how far after the deadline you submit or pay your bill.
Especially if you are a high earning sports professional, rushing your tax return could lead to mistakes that might mean you pay a higher tax bill than necessary, or even face legal ramifications down the line.
A great place to start could be to calculate your entire net earnings for the last tax year, using bank statements from all accounts you hold. Once you have an idea of what you have earned, you can begin to chip away at your self-assessment form, ensuring you declare every penny in a meticulous manner.
In future tax years, it could be helpful to make a monthly reconciliation of your earnings, so that when January comes around you are already fully prepared.
2. Learn which expenses and tax reliefs you can claim, and do so rigorously
Fortunately, when you complete a self-assessment tax return, you are able to claim many different types of expenses and reliefs, some of which other employed individuals are not able to claim.
Successfully claimed expenses are deducted from your overall earnings, so you will only pay Income Tax on the amount left over. This process could reduce your Income Tax bill drastically, and in some circumstances, take you into a lower tax band.
As of the 2022/23 tax year, you can usually claim:
- Travel expenses when the trip was for work, including fuel receipts, hotel bills, parking fees, and train or plane tickets
- Healthcare treatments that are conducted for professional reasons, such as physiotherapy, osteopathy, injury recovery treatment, private doctor visits, and medication for athletes
- Wages paid to employees of your business
- Clothing expenses, like uniforms, shoes, or other sports equipment that pertains to your profession
- Costs from your business premises, for example if you rent or own a training field
- Advertising or marketing costs, such as building your website, or hiring a social media manager
- Any training you have paid for, such as teaching qualifications or private sports coaching
- Some charitable donations.
In addition to these expenses, if you are a higher- or additional-rate taxpayer (either self-employed or employed), you can claim additional pension tax relief through self-assessment.
Usually, all taxpayers receive a basic rate of 20% tax relief on private pension contributions. This relief is either applied automatically through their employer, or claimed by the pension provider if they are self-employed.
However, many employed higher- and additional-rate taxpayers are unaware that by completing a self-assessment form, they can claim an extra 20% or 25% tax relief (respectively) on their pension contributions.
For example:
- You earned £100,000 in the 2021/22 tax year.
- Of this, £49,730 falls into the higher-rate Income Tax band.
- You contributed £20,000 into your private pension pot that year, and the 20% basic rate of tax relief was applied to the whole amount.
- In addition, by completing a self-assessment tax return, you claim an additional 20% relief.
- So, your £20,000 contribution benefits from a total of 40% relief.
What is more, you can claim four years of backdated additional pension contribution relief, provided that you have any remaining pension Annual Allowance in those tax years.
So, if you have not claimed this surplus relief on pension contributions in the past four tax years, you can do so before the deadline on 31 January 2023.
3. Connect with professionals who can help you
As a busy sports professional, you could be reading this and thinking, “when will I have time to get this right?”
Especially as the festive period draws near, you might feel worried that your busy calendar will not leave time to complete your tax return with the diligence it requires.
Indeed, the self-assessment process can be lengthy and tiresome. Nevertheless, it is essential, both from a legal standpoint and to ensure you do not pay more (or less) tax than you need to.
Luckily, there are professionals who can help you complete your self-assessment tax return within reach of the deadline.
We can connect you with experienced accountants who specialise in helping athletes like yourself pay the right amount of tax, so you can gain ample peace of mind that your wealth is in safe hands. Plus, we can answer any questions you may have about the taxation process.
Get in touch
If you wish to work with a professional who can help you pay the right amount of tax and claim the relief you deserve before the deadline, contact us today.
Email enquiries@dbl-am.com or call 01625 529 499 to find out how we can help you.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
