Joshua Beat Paul, But The Taxman Wins

Anthony Joshua will pay a huge tax bill following his earnings from the Jake Paul fight.

Joshua broke Paul’s jaw in the sixth-round with a right hand that ended the fight. The financial breakdowns reveal that Joshua is set to lose approximately £32 million (roughly $43 million) of his £68.5 million ($92 million) purse to the IRS and HMRC. While Joshua and Paul reportedly split a total prize pot of £137 million ($184 million), the tax implications for a UK resident fighting on US soil are substantial.

Because the bout took place at the Kaseya Center in Florida, Joshua is subject to the top US federal income tax rate of 37%. This results in roughly £25.6 million ($34.5 million) going directly to the IRS. The deductions continue once Joshua returns to the United Kingdom, where he is taxed on his global income as a resident.

The Implications

He is required to pay the difference between his total UK tax liability (top rate of 45%) and the tax already paid in the US. This “top-up” payment to HMRC is estimated at £5.5 million ($7.4 million). When combined with an additional £1.4 million ($1.8 million) in National Insurance contributions, his total tax burden reaches the £32 million mark. Meanwhile, other reports suggest that Joshua will pay close to $66 million.

“British star Joshua is set to be taxed by the US government for the earnings, as well as when he gets home to the UK. He will also have to give up some of the money in National Insurance contributions back home. There’s no state tax in Florida, but the US government is likely to charge an income tax of 37 per cent (about AU$52 million of the purse). Another $11.3 million will have to be paid to His Majesty’s Revenue and Customs (British tax), and $2.8m in National Insurance contributions. All up, Joshua will part ways with about $66m, leaving him with $74m in his pocket out of the total purse of $140m. Paul will only be taxed on the $52 million by the US government, meaning he’ll actually get to keep more than Joshua,” Yahoo News