Wembley Stadium could stage the 2011 Champions League final after the Government announced that foreign players involved in the match would be exempt from British tax.

Treasury officials have written to the FA to confirm that, if Wembley won the right to host the final, visiting teams would not come under the scrutiny of the taxman. Under the law, even sportspeople based overseas are liable to pay tax on earnings from bonuses and endorsements if they appear at UK events.

The system, criticised by sports officials last week as heavy-handed, cost Wembley the chance of hosting the Champions League final in 2010. Uefa, European football's governing body, said the national football stadium would not be given the lucrative game unless the tax regime changed.

Andy Burnham, the Secretary of State for Culture, Media and Sport, told Parliament yesterday of the exemption, which was introduced recently in Germany, where the tax rules are similar to the UK. It is expected to result in the 2011 Champions League final being awarded to Wembley by Uefa in the autumn.

The precedent could also help Britain in its attempt to host four other big events: the 2013 rugby league World Cup, the 2015 rugby union World Cup, the 2016 European Championship finals and the 2018 World Cup finals. The cost to the Treasury is estimated at £1.5million a year. Burnham is to continue to lobby the Treasury for the exemption to be extended to other sports events such as Wimbledon. The 2012 London Olympics are exempt through a special provision insisted upon by the International Olympic Committee.