Are footballers heading to Saudi for a tax-free income?

So, given we're super into taxes and football, and we thought it would be pretty cool to write a blog post that combines the two!

Saudi Arabia hasn't always been known as a footballing country, but many footballers are now following in the footsteps of the world number one, Cristiano Ronaldo. This summer's transfer window has seen big-name players like Wolves' Ruben Neves, Newcastle's Allan Saint-Maximin, and Liverpool's Roberto Firmino move to clubs in Saudi Arabia for lucrative offers. These are just a few names, and we're sure more will follow.

Playing in the UK has its advantages, as it boasts one of the best football leagues in the world and offers exceptionally good wages. However, tax rules tend to penalize high earners, and footballers see nearly half of their income being taxed.

So, is moving to Saudi Arabia the better option because it's tax-free? Yes, but as with tax matters, it's not always that straightforward, especially if the individuals are moving from the UK and are UK citizens.

The new tax year began on April 6th, 2023. Since then, players would have defaulted to being UK residents for the current tax year (2023-2024). As a result, they are subject to UK tax on their worldwide income until April 5th, 2024.

Players who move abroad typically seek to qualify for the split year treatment by claiming to have "started full-time work overseas". However, there are a few other conditions that must be met for this claim to be valid. The first of these is "continuing full-time work overseas". To qualify for split year treatment in the 2023-24 tax year, the player must also be working full-time overseas in the tax year following the year of departure (in this case, 2024-25). This means that they cannot be a UK tax resident in that year either. In short, the player must remain employed by the Saudi club until at least the summer 2025 transfer window.

The second additional condition is the amount of time that the player is permitted to spend in the UK in each tax year. For the 2023-24 tax year, the number of days that an individual can spend in the UK following their departure depends on the date of that departure. For example, someone leaving for Saudi in July 2023 would need to spend a certain number of nights in the UK before 5 April 2024, while those leaving in August 2023 would have a different number depending on other factors such as economic and social ties to the UK.

If the players fulfill these criteria, they will not have to pay UK tax on any of the income from Saudi Arabia. They will also be free to bring back any of this income to the UK without triggering a UK tax liability.

These rules differ slightly if the footballer is not a UK citizen.

Therefore, moving to Saudi Arabia for a tax-free income may sound appealing, but they would need to say goodbye to the UK for at least two years for it to be worthwhile from an income tax perspective.