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Andrew Penman, a financial expert who has worked with several leading clubs including Celtic & Fulham, dishes out some advice to players on how to maintain their wealth

Andrew Penman  Financial Advisor

Dear Footballer,

Let me begin with a cautionary tale. One of our football clients told us about a team-mate who wanted to add a swimming pool to his house after finding out that everyone else at the club had one. No expense was spared. He invested seven figures on the project and, understandably, was very keen to show everyone the results. The feedback was extremely positive and he was all smiles... until a couple of friends pointed out that they had had similar work done for a 10th of the price. And not only had he dramatically overpaid but he couldn't even swim.

Whether you are planning home improvements or not, taking the time to look after your finances is a good idea and it can make a significant difference to your lifestyle in the long term. The tips below explain how you can make your money work harder.

Set a budget and stick to it

The harsh reality for the vast majority of players is that, once it's all gone, you cannot easily get it back - not everyone can rely on being a successful TV pundit, promoting timepieces or securing a children's book deal to support them in later years. 

The average life expectancy in the UK is already over 80 years, so it is possible that your earnings over the next few seasons are going to have to last you for the following 50 years. It may seem obvious but start planning ahead now by setting yourself a budget each month, keeping an eye on your spending and putting the rest away for the future.  

We helped save one of our footballing clients thousands of pounds a month simply by going through all of his standing orders and cancelling those that were no longer needed. After a few hours with one of my colleagues, he had managed to cut his spending without needing to compromise on his lifestyle.

Of course, for some players, cancelling a few direct debits may not be enough. If you are struggling with debt, then the first thing you need to do is acknowledge the problem and seek advice. You're not alone - many players have racked up large debts by trying to live a lifestyle that is not compatible with even their considerable earnings. In most cases it is possible to get back on the road to recovery with some honest and impartial advice.

Swimming in money | But a footballer's wealth can dry up if they're not careful

Ensure your finances are tax efficient

If a clever tax-avoidance scheme sounds too good to be true, then it probably is. In the current political and economic climate, choosing something too racy is likely to upset the taxman and get you on the front page of the newspapers for all the wrong reasons - remember what happened to Jimmy Carr.

Do the basics right, such as ensuring that you are maximising your pension contributions, which are likely to benefit from up to 50 per cent tax relief in the current tax year. 

If you are willing to take a punt, consider investing in a fledgling business in a tax-efficient and legitimate manner through a Venture Capital Trust (VCT), Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS). All of these attract income tax relief of between 30% and 50% and some also offer you the option to defer some of the tax due on capital gains that you have made elsewhere.

It can also be tax-efficient to place savings and investments in joint names or a spouse's sole name so that any income generated is taxable at lower rates. Keep in mind, though, that you give away your entitlement to those investments when you transfer them.

As we have seen with David Beckham, giving to charity is not only tax-efficient but can generate enormously positive publicity, which in turn may increase earning potential by more than the amounts given away

Diversify your wealth

Split your cash amongst a variety of assets rather than focusing just on one area. Stability and security is usually achieved by spreading the risk. Investing in real estate seems to be popular amongst footballers at the moment. Do not put all of your eggs in one basket.

Give it away!

Some players have started setting up their own trusts and foundations. As we have seen in recent weeks with David Beckham, giving to charity is not only tax-efficient but can generate enormously positive publicity, which in turn may increase earning potential by considerably more than the amounts given away.

Good financial management is mostly common sense but the range of options available to you can be bewildering - and it gets even more complicated if you are an overseas player

Take advice

Good financial management is mostly common sense but the range of options available to you can be bewildering - and it gets even more complicated if you are an overseas player working in the UK or a British player plying your trade elsewhere. That's why it can be worthwhile to hire a good accountant to keep track of your finances. If you do not know an accountant, contact one of the trade bodies or ask around for recommendations.

Whether you are earning £500 per week or £250,000, you cannot afford not to look after your money. If you have any queries about anything contained in this letter – or, indeed, about any financial issues – then please do not hesitate to get in touch.

Yours sincerely,

Andrew Penman

Andrew Penman is Head of London Private Client Tax Services at PKF Accountants & business advisors and has over 20 years of tax experience. Andrew has worked with several football clubs including Celtic and Fulham.