As Luke Littler pays almost £500,000 to HMRC, could you make your wealth more tax-efficient?

Darts sensation Luke Littler was already a millionaire before he celebrated his 18th birthday on 21 January 2025. He became a household name after securing second place in the 2024/25 PDC World Darts Championship, a rare achievement for an unseeded player and especially one so young.

At the beginning of this year, he went on to win the title and added the £500,000 prize to the significant amount he had previously earned. In fact, according to Sky News, Littler already had a total of £1,013,500 in career winnings before becoming world champion.

While he is likely enjoying a quality of life he could not have imagined before, this sudden influx in earnings does mean that Littler has a significant tax bill to pay. Indeed, Sky News reports that he has already paid £452,772 in Income Tax in the past few years.

This is a common situation for athletes at the beginning of their careers. Once you started playing professional rugby, you might have seen a significant increase in your earnings, seemingly overnight. As a result, your tax liability may have increased, and you might not have been aware of how to mitigate a large bill. Fortunately, there are ways to potentially reduce the amount you pay.

Here are two ways to make your wealth more tax-efficient.

1. Consider increasing your pension contributions

If you sign a new contract and your earnings suddenly rise, you might be concerned about the Income Tax you will pay. In this case, you could consider increasing your pension contributions.

This might benefit you because you automatically receive 20% tax relief on your contributions. In practice, this means that £100 going into your pension “costs” you £80, with the government contributing the other £20 in the form of tax relief.

If you are a higher- or additional-rate taxpayer, you may be able to claim another 20% or 25% through self-assessment.

By increasing your pension contributions, you could effectively reduce your Income Tax bill because the amount you would have paid goes into your pension in the form of tax relief instead. Consequently, you could build more savings for the future.

This may be especially beneficial for professional rugby players because, once you retire from playing, your income could fall again. As well as reducing tax, increasing your pension contributions may allow you to boost the size of your retirement pot earlier in life, when you are at peak earning potential.

As a result, you may find it easier to reach your retirement savings goals and maintain a good quality of life in your later years.

That said, the amount of tax relief you can benefit from is limited by your Annual Allowance. This is the total amount you can pay into your pension each year without triggering an additional tax charge. The figure includes your own payments as well as employer contributions and tax relief. In 2024/25, the Annual Allowance is £60,000 (less any employer contributions made this tax year, and plus any carry forward) or 100% of your earnings, whichever is lower.

It is also important to note that you will not typically be able to access wealth in your pensions until you reach the normal minimum pension age (NMPA) of 55 (rising to 57 in 2028). As such, you may also want to explore other tax-efficient ways to hold and grow your wealth, including ISAs.

2. Take advantage of your ISAs

ISAs are an effective tax wrapper that you can use to potentially mitigate a large bill. This is because you do not pay Dividend Tax, Capital Gains Tax (CGT), or Income Tax on investment returns or interest on wealth in an ISA. You do not pay tax when withdrawing the funds either, and unlike your pensions, you can access your wealth at any age.

In the 2024/25 tax year, you can contribute up to £20,000 across all your ISAs, and there are several different types you may benefit from including:

  • A Cash ISA, which allows you to make contributions and generate interest, much like a standard savings account. You can open a flexible Cash ISA and withdraw your savings whenever you like without a penalty. Alternatively, you could choose a fixed-term account, which locks your savings away for a set period, and may offer a higher interest rate.
  • A Stocks and Shares ISA, which allows you to invest in a range of products including stocks and shares, funds, and bonds tax-efficiently.

You can also open a Junior ISA on behalf of a child or grandchild, and this enjoys the same tax efficiency as an adult ISA. In 2024/25, you can contribute up to £9,000 a year for each child, and this is separate from your adult ISA allowance.

Your partner also has their own ISA allowance. As a result, you could tax-efficiently save or invest up to £40,000 between you, and potentially set more aside for your children, if you have any.

Bear in mind that your ISA allowance resets at the beginning of the new tax year on 6 April 2025. You cannot carry over your unused allowance, so you may want to contribute as much as possible to your ISAs before then to start building wealth tax-efficiently.

Get in touch

If you are concerned about the tax you might pay during your playing career and beyond, we can help.

Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

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.

The Financial Conduct Authority does not regulate tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.