Cristiano Ronaldo is in line for a major earnings boost following the government's decision to cut the highest rate of tax and national insurance.
The Manchester United superstar is understood to earn a wage in the region of £510,000 after returning to Old Trafford last summer. That equates to £26.5million in gross income, a jaw-dropping figure for many given the current cost of living crisis.
Nearly half of that income goes straight to HM Revenue and Customs, with Ronaldo paying £12.78m in tax on his wages alone. That was until Prime Minister Liz Truss and chancellor Kwasi Kwarteng announced the sweeping changes they were making to the United Kingdom's taxation rules last Friday.
As part of the changes, the 45 per cent additional rate income tax band for those earning more than £150,000 will be scrapped entirely. Instead, the 40 per cent higher rate, charged on incomes above £50,271, will remain.
The basic rate of income tax will also be cut from 20 per cent to 19 per cent in April, while it was also confirmed that the 1.25 per cent rise in national insurance that was introduced earlier this year will be cancelled from 6 November.
Football finance expert Kieran Maguire revealed that the changes mean Ronaldo will bring home an extra net income of £1.3m. While he defended Ronaldo's huge wages, Maguire questioned if the government were taking the right approach.
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“ Cristiano Ronaldo ’s take home will increase by roughly £1.3m over the course of 12 months, which is a lot of money. I’ll always defend footballer’s pay. We live in a market-based environment," Maguire told the i.
"It is a short career and the majority of players don’t earn the money that provides the focus for people like me who will show the strange benefits that these things can bring. I’m sure it wasn’t the driving force of Kwasi Kwarteng’s decision-making but it does illustrate the impact it has.
“The tax issue in its own right isn’t significant but what will happen is the clue: there’ll be a significant uplift in terms of net pay and you have to ask yourself what’s going to happen in that situation? Is it going to have a positive impact on the economy?
“Ronaldo gets an extra £1.3m, he’s going to save that as he already has a huge take home whereas it could be argued if you get Manchester United’s 1,000 part-time staff an extra £1,300 each they’re going to spend that. It’s the nature of income distribution, people who are poorer spend because they can’t afford to save."
According to The Times, it is not only good news for Ronaldo, with the average income of a Premier League player set to rise by about £240,000 thanks to the changes. The average player earns in the region of £4m per year, with top-flight stars paying £1.4billion in tax in total, a figure that will drop by £70m when the changes become law.
