Premier League 'luxury tax' explained as Everton await second FFP hearing outcome

The Premier League are considering introducing a 'luxury tax' as a form of punishment for sides that fall foul of financial regulations.

It is believed this could replace points deductions as the method of discipline on sides unable to balance their books, with the financial penalty dependant on capital spent.

Everton were deducted ten points by the Premier League in November for breaching profit and sustainability rules by £19.5million for the period of 2021/22, though this was reduced to six points following a successful appeal last month.

The Blues are currently waiting to discover if a second points deduction will be coming their way relating to accounts published for 2022/23. Nottingham Forest recently suffered a similar fate and were hit with a four-point penalty, though Manchester City's 115 charges are yet to be determined.

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As reported earlier today by the ECHO, a 'radical reform' regarding financial repercussions has been discussed among the clubs in the division and it is believed 'an entirely new system' could be voted in at the end of the current season, with as many as 17 sides willing to vote through this change.

What will 'luxury tax' mean for clubs?

Business of Football writer, Dave Powell, explains: "UEFA have long given their view that they don’t believe points deductions to be the appropriate way of dealing with financial breaches. With the Premier League moving toward new cost controls that will be more in line with UEFA’s squad cost ratio, it makes sense that they would want to try and find a way to be on the same page with regard to sanctions.

"A luxury tax