Budget changes will made it harder for top sides like Wolves and Aston Villa to attract players, a tax expert has warned.

Spain, with a much more favourable tax regime, is likely to be the choice of the stars, it is claimed.

Andrew Shaw, national tax managing partner of BTG Tax, part of the Begbies Traynor Group, hit out following the introduction of a new top rate of 50 per cent and restrictions on tax relief on pension contributions.

He fears that seeking to raise tax revenues from the few will see many wealthy people exit the country, including the most talented footballers.

Mr Shaw said: “In reality it will drive abroad ‘higher earners’ and discourage people from coming to the UK.

“The tax raising measures will not raise taxes – watch professional footballers emigrate to play in Spain where a top rate of income tax of 24 per cent applies.

“Certainly it will make it harder for the likes of Villa to sign foreign stars and it could also mean that home grown products are more likely to consider moving abroad to maximise their earnings.

“When you couple this with the effects of the recession then the challenge to the Premier League is going to be significant.

“All but those clubs whose billionaire owners have the deepest pockets are likely to be concerned.”

BTG Tax acts for a host of soccer’s elite, including leading international players, particularly in relation to image rights.
The new tax regime begins from April 2010 so clubs will have a year to adjust. It will come into force for the 2010/11 season.

Mr Shaw believes the UK can only lose out from the changes.

He added: “Watch financial institutions and global corporates place their top executives in countries in Europe with lower tax levels. Watch the world's wealthy gather in Switzerland or Monaco, rather than gravitating towards London.

“These people buy goods, buy services, employ people, own property; all these activities generate tax revenues. If they are not in London or indeed anywhere in the UK, then they will not be helping the national tax collection, whether it be VAT, PAYE, National Insurance, Betting Duty, or any other form of taxation.”

And in a second blow to professional sport, clubs are set to suffer from a further Budget change.
It concerns players being set up with a house or flat when they join.

John Hill, a director of BTG Tax, said: “Legislation has now been introduced to prevent employees from artificially reducing the tax charge on the benefit of living accommodation provided by their employer, by entering into an arrangement to pay a lease premium up front followed by smaller rental payments.

“The legislation will ensure that where a premium is paid on a lease of ten years or less, it will be treated as actual rent paid. The taxable amount for the year will be the rent paid plus the lease premium spread over the duration of the lease.

“This will be of particular interest to employers such as football and rugby clubs where the provision of accommodation is a standard feature of players’ contracts.”