Sports Financial Adviser Curtis Anderson gives his take on how transfer dealings at this time of year can impact your personal financial circumstances.

The January window can create both opportunity and uncertainty for a player. Depending on your circumstances, this can impact on you financially in ways you may not have considered. This short article has been written so that I can at least highlight to you the financial impact of some of the decisions you may be making at this time of year. As different scenarios play out, here are 3 circumstances you may now find yourself in:

1. I’ve moved clubs
2. I’ve been sent out or recalled from my loan
3. I’ve had a contract extension

I’ve moved clubs

Getting a move can be a massive upheaval, but also can be a fantastic life event and potentially offer pay rises, signing bonuses and relocation.

If you are moving house, you need to consider whether it is best for you to rent or buy a property. If renting, often short-term deals can involve moving into a club owned house. This might mean you owe tax in the form of what is known as a P11D Benefit in Kind if the club pay for accommodation costs on your behalf. This is worked out by adding the cost of your accommodation onto your annual income and you incur tax as if you’d earned this money. Your accountant can give you guidance on this, or you can contact me and I’ll introduce you to someone who can help.

You may decide to buy a house, either as a main residence, or as an investment. Again, depending on how many properties you own, there may be tax considerations.  You may need to look at factors such as mortgage rates, property insurance, life cover, illness insurance and stamp duty.  We can help you source the best deals to make sure you don’t overpay.

Moving clubs can also be rewarded with a pay rise and/or signing bonus. Whilst this sounds like good news, there might be costs associated with it. It is worth finding answers to questions like: ‘Does my new wage take me into a new tax band?’; ‘Could my performance bonuses have the potential to take me into a higher rate of tax?’. This is important as you might think you’re expecting a decent bonus, but then it turns out that more money ends up with the tax man than with you. If this is the case, there are tax incentivised savings that can help reduce your tax bill. Do you know what tax advantageous investments are on the market? Things that may come into a strategy are retirement planning vehicles and tax relievable investment portfolios. We can help you work out a plan for this.

One major risk to your income is your health. It isn’t a worry whilst you feel fit and healthy, but unfortunately no one is invincible. Increases in outgoings often follow increases in earnings, so please ensure you have the appropriate level of insurance in place. This may include career ending insurance, life and critical illness cover.

I’ve been sent out or recalled from my loan

Whilst you will likely have similar considerations to those of a player permanently moving clubs, the temporary nature of loan deals may make decision making more challenging.

The key is to be aware of your tax status and what may affect your pay. Remember you may get an additional tax bill if you are living in digs at the expense of the loan club or your earnings have increased.  This could include any relocation payments made by either club.

If you have not played, but now find yourself starting games, you may have the opportunity to receive performance related bonuses. A smart move might be to take these bonuses and put them aside in a savings plan for your future.

Again, please remember to review your insurance regularly in line with your earnings, regardless of whether you are in the starting eleven or not.

I’ve had a contract extension

In addition to the above, a contract extension may give you more certainty and you may now consider buying a main residence, saving more of your income and making more long-term financial decisions.

One of the areas we spend a large amount of our time is helping players update their long-term financial plan. If you have an extra 2 years on your contract for example, you could put a plan in place to contribute a percentage of your increase to your ‘after football fund’. Making consistent contributions to a plan and allowing it time to grow can produce a savings fund that may surprise you.

Whilst updating your plan, this is a great time to find out what you have already got. We can help you access the information on your PFA pension and any other investments so you can gain a current snapshot of your assets and see what the future might look like. Are you aware of how much the PFA pay into your pension every year and what it’s now worth? If you are unaware of how to find any of this information, I can help access it for you.

Summary

Whatever changes are happening in your life, having a solid financial plan is the key to achieving long-term success and maximising your career earnings.

Having been a professional at multiple levels of the game, I am ideally placed to help you make the most of your finances, and assist you in achieving your financial goals.

If you feel you could benefit from my help, you can contact me using any of the options below.