The chances are that most of you will have access to an accountant or financial advisor but you aren’t aware of the benefits of using one. Well, this week’s Fly On The Ball Chat will show you why using one can benefit your performance on the pitch.
Jack Mackreth is the director at Kyzen Sports, an accountancy firm specialising in professional sports. Jack combines his passion for educating players about their taxes, with his experiences as a professional footballer.
So Jack, tell us a little bit about yourself and Kyzen Sports…
I started at Tranmere as a kid, going through the academy system from under 10’s to the first-team. I got to the point where I reached the first-team and was probably lacking confidence.
I went on to play for Barrow, which was my first taste of first-team football, then Macclesfield Town, where I had my best memories. I went on to play for Grimbsy Town, Bury when the club went through those financial difficulties, and I’m currently at Warrington Town. I never considered part-time football, my last full-time club was Wrexham, but it suits my work-life balance in terms of directing Kyzen and still playing football.
I set up Kyzen Sports 5/6 years ago now but I always had life after football in the back of my mind from an early age. I studied different qualifications whilst living away from home. We set this up and it’s been going really well and I’m enjoying a different side to football. I do miss the full-time aspect but I’m enjoying a different challenge now.
What made you want to help players with their taxes and finances? Did something happen or was it something you planned on doing from an early age?
It was a mix of a few things. A lot of my family are involved in finance, so it was something I had always considered. When I was at Grimsby I started studying accountancy.
Part of the story behind why I started the business is, that I wasn’t playing at the time and Tranmere come in to sign me but I had just bought a property with my now wife. I happened to bump into an old school friend and he said why don’t you start working in this accountancy company he was working in. So a few boys at Tranmere got wind and they started asking for help with their taxes.
That is partly how it started and the other reason was an event that happened. I was staying in club accommodation at Grimsby for 18 months, which the club was paying. What I didn’t realise at the time was that was treated as a tax, that was taxable to me. So once I left the club I got a tax bill through the door that I wasn’t expecting but had to pay.
So my family being involved in finance, a little bit of chance bumping into an old school friend, and then the tax bill, have all moulded into one to create this business that helps players.
Was anyone doing your finances for you at the time you got that tax bill?
No, so I tried to deal with it myself and called HMRC but got nowhere. Luckily I had family working in accounts and I spoke with someone who managed to deal with the situation and I slowly paid off the bill. I didn’t fully understand where it come from, I just got told what to do.
One of the main reasons why I started this business and how I’ve structured it is because of my experience with that tax bill.
So from your experience, what would you say are the benefits of someone doing your taxes for you as a professional player?
I always say when I speak with a player, or go into clubs and do presentations that, footballers will have professionals to deal with their contract negotiations, their mortgages, etc, but won’t have an accountant to deal with the financial side of things.
We specialise in working with professional footballers, we want the players to focus on their careers. We want the players to not have any worries about the reliefs they’re entitled to, what their tax code means, or how their next contract will be taxed.
We deal with that but by the end of the service I like to equip our players with enough information so that they understand the rules behind taxes, the reliefs they’re entitled to, how a tax code works and what a P11D means.
The main thing for me is to educate the players. Dealing with a professional company allows you to be educated on the rules and regulations of tax.
I imagine you must deal with players who have been badly advised and are being penalised a lot?
The one we experience the most is agent fees. Agents get a fee when they negotiate a contract. The rule is that HMRC will treat your agent fees like income. So if your agent is paid £5000 from the club, that will be treated as if you have been paid £5000 and you will be taxed on it. You can pay it through your tax code or you’ll get a tax bill at the end of the year.
The player isn’t aware and it’s a nasty shock. What we hear a lot is, “No I didn’t pay my agent, the club did”, but that means you’re going to have to pay tax on it. So that’s what we’re trying to do, we’re trying to make sure players understand some of the basics around tax, agent fees, and other things. Not to deal with themselves but so they know when they need to speak to somebody so that they can focus on their football.
From what you’ve said, you believe that accountants are a part of your support network just like agents are.
I remember being told, “Look there is an accountant at the agency, you can use them if you want to”. I wish I had been told to use them, not just, “They’re there if you want”. You’re a young player earning good money, you don’t think about tax at 19 years old.
At 21, I had an agent who offered the services of professionals within the agency; solicitors, car dealerships, and accountants to offer an all-round service, but they didn’t explain why I needed an accountant. I wouldn’t have had that nasty shock of that tax bill but as you said, at 18/19 you just want to focus on your career.
I think every young player needs to consider having a chat with an accountant and educating themselves to a point where they understand how it all works.
So what would you say to a young pro just starting to earn money, or an older pro looking to secure financial security post-career?
Speak with a couple of accountants and a financial advisor, even if you don’t use them straight away. Create a network of people around you to manage your finances so that you can concentrate on your football.
If I could speak to my 18-year-old self, I’d be looking to educate myself on the use of an ISA, a pension, the workplace pension, and national insurance contributions.
At the beginning of your career, it might not be necessary to have an accountant. At that age, it would just be about taking advantage of the tax reliefs you’re entitled to.
- Equipment you buy
As your career progresses, you’re used to speaking with an accountant and doing your self-assessment every year. That then builds up a relationship and trust between yourself and the accountant where you can develop and build on some of the reliefs, like;
- ISA contributions
- Pension contributions
I want every player reading this to concentrate on football, you only get one chance but I think I was lucky in that I always knew in the back of my mind what I was going to do after football. I talk to my clients about tax planning to hopefully take advantage of reliefs further down the line, but not only that, I tell them to plan for what they want to do after football because it does come to a stop at some point and we all have to face it.
It is important, it’s taken an injury for me to realise how important planning for the future is. I imagine you never really experienced it but I think a lot of younger players believe they’ve got until they’re 35 and by then it’s too late.
I had something similar to you in terms of an injury but slightly different. I was at Bury during their financial difficulties, so I ended up signing for Wrexham where I had a couple of injuries before the end of the season and didn’t get offered a new contract.
I thought I’d get another club but it just didn’t happen. It got to September and I didn’t get that call and I ended up signing for Warrington, who I love playing for now.
So it wasn’t an injury that put an end to my full-time career, but circumstances didn’t add up so that is why I was lucky that I had made a plan for after football.
Something I’m intrigued to explore a little further and think will be a great benefit for players reading this is tax relief. You’ve mentioned it a lot so can you explain that in more detail for any players who are unaware of what it is.
Players are entitled to tax relief for any equipment they buy.
- Anything that you’ve got to have to play football
You’re then entitled to travel and subsistence.
- You can claim 45p per mile to anywhere that is your non-place of work.
The most obvious one where you’re going away from your place of work is away games, meeting the coach somewhere for example.
Whilst you’re on those journeys you’re entitled to tax relief on;
- Any toll roads
- Food or drink that you purchase
You can also claim for washing your training kit.
Sometimes what we’ll see is that the way player’s pension is deducted from their salary, it’s getting taxed. With a pension scheme you’re not meant to pay tax on it, you’re meant to get tax relief on it. So you can include that on your self-assessment and get relief on it, or depending on your level of income, we can discuss setting up something called a SIPP (Self-Invested Personal Pension).
With a pension you get tax relief for making contributions, it depends on your level of salary but that would be one of the last things we look at.
I’m not a financial advisor, I can give you the tax rules behind it but we have a network of financial advisors so that if a player wants to talk about what fund they wish to use, there are people to use.
National insurance claims
We see a lot of players transferring from club to club and their national insurance isn’t deducted correctly. We can do a quick calculation to figure out if players have overpaid on their national insurance.
Your tax code dictates how much tax-free allowance you get. So normally a starting tax code looks something like ‘1250L’, which would mean you’re getting £12,500 tax-free in a year. The more tax-free money you have, the more tax relief you get, so less tax you pay.
What HMRC will do is they’ll increase your tax-free allowance to give you tax relief or decrease it to collect tax. I always say to players, “If your tax code isn’t 1250L, it’s not a coincidence”.
They’re either collecting tax or giving you tax relief and you should know why. If your tax code is lower, then potentially HMRC could be collecting, let’s say £200 a month tax. If I asked you to give me £200 a month, you’d say, “No”, unless I told you why, so I like to know why and I’d also want the player to know why too.
Pension contributions, national insurance, and tax code can be found on payslips.
I think it’s important that players are educated on the financial side because the money you earn in football can’t last forever.
18-year-old players that sign for clubs, if they can plan for after football, then when they do get that contract that is life-changing money, hopefully, a network of people can help them plan. That way, when they do finish, they’ve got savings there and a plan for when football finishes.
If we can get players doing it from an early age, at 35 hopefully they’ll be in a position where they’ve planned for the future and they know what the next stage is. They have also taken advantage of the reliefs from day one, up to 35, so they’re financially comfortable once they eventually say goodbye to their playing days.
There is a lot that players of all ages and levels can take from Jack’s experiences and expertise. If you’re a player who is looking to speak to an accountant or find out some more, then reach out to Jack and his team at Kyzen Sports.
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