Premier League 'luxury tax' explained as Manchester United and Man City brace for FFP decision

Premier League clubs are reportedly considering introducing a 'luxury tax' which would bring potential changes to how breaches of Profitability and Sustainability Rules (PSR) are punished.

Manchester United and Manchester City have been watching on this season as two top-flight clubs have been charged with alleged PSR breaches - Nottingham Forest and Everton. City, on the other hand, are currently being investigated for their 115 financial charges. The club strongly deny any wrongdoing.

Forest and Everton were handed points deductions by independent commissions after being found in breach of the financial rules. Forest were docked four points while Everton have been deducted six points, which was reduced from 10 on appeal, and are still awaiting the outcome of a second charge.

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Championship outfit Leicester City have also been charged with an alleged breach and face a hearing in front of an independent commission where they could face a possible points deduction at the start of next season if they earn promotion back to the Premier League.

According to the Daily Mail, it is claimed that Premier League clubs are 'considering' getting rid of the points deduction punishment amid plans for a 'luxury tax.' It is said that as many as 17 clubs are in favour and the 'radical reform' could be voted in at the end-of-the-season meeting in June.

One of the options being discussed would be to have clubs that overspend given a financial punishment, that will increase the more they spend. The fees collected could be