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Volunteering, tax and national insurance

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If volunteers only get reasonable out-of-pocket expenses then this will not have tax implications.

Volunteers who get more than out-of-pocket expenses

Payment that is more than out-of-pocket expenses will be treated as taxable income, so income tax and national insurance regulations will apply. These rules will apply even if you describe payments with terms such as:

  • expense
  • pocket money
  • sessional payment
  • stipend.

As well as such payments having potential implications for the legal status of the volunteer, the payment would also need to be taxed. 

Tax and reimbursements

Volunteers should be reimbursed for expenses incurred in the course of their volunteering. These costs should be genuine and have been necessary for the role. Adequate records should be kept of the expenses eg receipts, travel tickets or other evidence.

These can include the sort of expenses for which employees would be reimbursed, eg:

  • travel while volunteering
  • post and phone costs
  • the cost of protective clothing or special equipment needed for the role.

These can also include volunteer-specific expenses for which employees would not be reimbursed, eg:

  • travel to and from the organisation (or wherever the voluntary work is taking place)
  • meals while volunteering
  • care of dependants (eg children or older parents) while volunteering

However, volunteer-specific expenses can only be reimbursed tax-free for genuine (ie unpaid) volunteers. So if ‘volunteers’ get payment or income from the organisation over out-of-pocket expenses, they will be taxed on volunteer-specific expenses.

Keeping records

Volunteers should be asked to give the organisation their receipts, travel tickets or similar evidence for expenses. Reimbursement of out-of-pocket expenses does not have to be entered on the tax form P11D, organisations should be able to show that they were not giving volunteers taxable income. It is helpful to have an expenses claim form for volunteers, which can be kept with the receipts and other evidence of the costs incurred by volunteers.

Good practice guidance

Tax issues can be complex. The clearest information on volunteering on the HMRC website is in technical manuals for staff.

For example, the Employment Income Manual says:

Voluntary workers

Before tax can be charged under the provisions relating to employment income there must be:

  • either an office or an employment
  • and earnings from that office or employment.

A person who does voluntary unpaid work for a voluntary organisation, for example, a charity or local society, will not normally be engaged under a contract of employment and will not normally be the holder of an office. If there is no office or employment, it follows that the reimbursement of any expenses incurred by voluntary workers in doing the work of the organisation will not give rise to liability to tax. Similarly, voluntary workers who are otherwise unpaid are **not ** liable to tax on the reimbursement of the extra cost they might incur because they undertake such work, for example, the expenses of travel between home and the place where the work is done.

Page last edited Sep 01, 2020

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