Twenty lower league football clubs in the UK are currently in debt to His Majesty’s Revenue and Customs (HMRC) for unpaid Pay as You Earn (PAYE) tax, amounting to £1.04m ($1.41m), chartered accountants Lubbock Fine revealed.

This debt constitutes 89% of the total tax arrears of £1.17m owed by these clubs.

PAYE is a payroll tax that employers deduct from employees’ salaries, which includes not only players but also staff involved in catering, cleaning, and administration.

HMRC has taken steps against several clubs by issuing ‘winding-up petitions’, which indicate intentions to dissolve businesses that do not comply with tax obligations.

Clubs affected by these actions include Reading FC, Southend United, Taunton Town, and Chorley FC.

Lubbock Fine director Graham Caddock pointed out that the recent increase in employer national insurance contributions (NIC) from 13.8% to 15%, effective from April 2025, is exacerbating the financial difficulties faced by smaller clubs.

Caddock further noted that the combination of rising costs and decreasing revenues is leading many lower league clubs to fall further behind on their tax payments.

Caddock said: “Football clubs are struggling to meet their growing tax obligations. Lower league clubs are especially hard hit as far less of the increases in the revenue from broadcast rights trickles down to the lower leagues.”

“Many clubs are seeing lower ticket sales due to the cost-of-living crisis.”

“One problem is that clubs often prioritise meeting payroll obligations for footballers and other staff before repaying other tax debts. This ensures employees have a pay check in the short term, but if unaddressed can result in unmanageable tax debts that can affect the sustainability of the club as a whole.”

HMRC is also increasingly turning to third-party enforcement to recover unpaid PAYE debts.

Caddock added: “HMRC is intensifying its compliance drive and this includes increased use of third party debt collection agencies. These outsourced debt collectors can be very aggressive in their pursuit of repayment.”

“The best course of action is always to approach HMRC early and explain your club’s financial situation. The tax authority is far more likely to be understanding if a football club is proactive and cooperative. Disclosing any tax debts when they arise will reduce the likelihood of a winding up petition.”