win incentives

win incentives

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An amateur sports club has for many years paid a match winning bonus to its players.  The bonus was initially 'cash over the bar' but now takes the form of a credit to a card that can be used either to pay for goods purchased from the club shop or across the bar.  None of the players are professional or even semi-professional and there is no formal contractual obligation to pay the bonus although this is clearly customary.  The bonus would typically amount to £30 per player however payment is at the club or coach discretion so that this could, for example, be witheld where a player had not attended a training session prior to the match or committed some other indiscretion. 

The club is well organised having a number of teams, proper sports and training facilities and clubhouse including a function room and bar.  All players are members of the club and pay an annual membership fee.

The question has been asked as to whether the win bonus paid in its current format should be subject to deduction of PAYE or NIC?  We have asked HMRC for their views and they are undecided.

Any and all thoughts would be welcome.

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By David Heaton
08th Oct 2014 18:27

Strange that HMRC is undecided


A different part of HMRC has been pursuing cricket clubs in various amateur leagues for PAYE on payments to players, groundsmen and bar staff, arguing that they are all employed by the club.  See the articles in Taxation magazine last year.

*If* there is a liability, it is likely to be BR tax on £30 per week (unless any of the recipients can make a starter declaration that it is their only or main job, and thereby get a 1000L or 1000L wk1 code), but the amounts are below the earnings threshold for NIC.

*If* there is a BR liability, the club will be into RTI, and all payments will therefore find their way to DWP's records, too, so any of the players on universal credit should see their benefit reduced by their 'earnings'.

The argument against the club having a PAYE liability is fairly simple - they are not employees.  Run the Employment Status Indicator on HMRC's website and you'll probably get a self-employed answer, which ought to be good enough for HMRC, although they have rejected it with some cricket club cases.  The club members won't be under the control of the club or the skipper, they won't be obliged to turn up, and they're really there as club members rather than employees.  But that doesn't mean they won't have to report the income under SA as what we used to call Case 1 or Case 6. 

Good luck!

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