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If your sports club is registered with HM Revenue & Customs (HMRC) as a Community Amateur Sports Club (CASC), you may qualify for a number of tax advantages - known as tax exemptions and tax reliefs - on income, gains and on profits from some activities. These include claiming back tax on Gift Aid donations, and relief on Corporation Tax and on non-domestic rates.
However - this doesn't mean that your club won't ever have to pay any tax - some income may remain taxable.
This guide outlines the tax reliefs available to CASCs and how to claim them.
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Sports clubs are liable to pay Corporation Tax on their profits. Sports club profits include all income and any capital gains made.
If your sports club is registered as a CASC it may be able to get tax reliefs to reduce its Corporation Tax bill. These reliefs include not having to pay tax on:
Your club must use its income and gains for 'qualifying purposes' to be able to claim the full amount of the relief. Qualifying purposes are providing facilities for eligible sports and encouraging people to take part in them. If your club spends some of its funds on non-qualifying purposes the reliefs will be restricted and you may end up with a tax bill. To find out more see section below 'Restrictions on relief - non-qualifying expenditure'.
Find out more about tax on CASC trading and business activity
If your CASC provides goods and services for club members - for example, a bar for their exclusive use - this doesn't count as trading, therefore any profits made aren't taxable.
If your CASCs overall income (turnover) from trading activities is more than £30,000, or your rental income before allowable deductions is over £20,000, you won't get any tax relief for these types of income. In these cases you'll have to pay tax on the full amount after allowable deductions.
Your CASC has turnover of £10,000 from trading activities, rental income of £15,000 and interest of £500. You use all the income for maintaining the club facilities. The club doesn't have to pay tax on any of its income because the trading and rental incomes are below the limits.
Your CASC has turnover of £40,000 from trading activities, giving a profit of £6,000. You have to pay tax on the whole £6,000 profit because the turnover is more than the £30,000 limit. Your CASC also has gross rental income of £12,000, net £4,000 after deducting expenses. You don't have to pay any tax on the rental income because the gross rents are below the £20,000 limit.
For more information on tax relief on trading profits, see the link at the end of this section 'Find out more about tax on CASC trading and business activity'.
If your CASC is based in England or Wales, you'll get 80 per cent rates relief if the club's property is used wholly or mainly for the purposes of:
This means you'll only have to pay 20 per cent of the non-domestic rates. CASCs in Scotland get the same relief.
This relief is 'mandatory' - Local Authorities must give it. HMRC doesn't deal with rates or rates relief. If you need to find out more about paying non-domestic rates, you'll need to contact your local authority finance department.
Your local council details are available on the GOV.UK website (Opens new window)
Gift Aid is a way for your CASC to increase the value of monetary gifts from UK taxpayers made to your club at no extra cost to the donor.
As long as the rules of the Gift Aid scheme are met, your club can claim back basic rate tax on donations made by individuals.
You can only use the Gift Aid scheme for voluntary donations. You can't use it to claim tax back on:
To claim tax back on Gift Aid donations - see the link at the end of the next section 'Find out how to reclaim tax on Gift Aid and other income'.
Find out more about Gift Aid for CASCs
Some income has tax taken off before you get it. If your club is registered as a CASC you may be able to claim tax back on income that's already been taxed. This includes interest from banks or building societies that had tax taken off before it was paid.
Your club doesn't have to fill in a Company Tax Return to claim back the tax. When you register as a CASC, HMRC will send you a form for claiming back tax on Gift Aid and other income that's already had tax deducted, for example on bank and building society interest.
Find out how to reclaim tax on Gift Aid and on other income
Your club must use its income for 'qualifying purposes' to be able to claim full relief from tax. Qualifying purposes are providing facilities for eligible sports and encouraging people to take part in them.
If your club uses any of its income or gains for non-qualifying purposes - sometimes known as 'non-qualifying expenditure' - the reliefs will be restricted and you may end up with a tax bill.
Your club is registered as a CASC. Its income for the last accounting period was made up as follows:
Type of income: |
Amount |
|---|---|
Bank interest |
£6,000 |
Income from property (gross - before expenses) |
£5,000 |
Gift Aid income |
£15,000 |
Total income apart from membership fees |
£26,000 |
Membership fees |
£5,000 |
Total income including membership fees |
£31,000 |
During the accounting period your club spent £7,000 on a non-qualifying purpose.
To work out the amount of income that can be covered by the relief:
Using the example in the table above, this works as follows:
£26,000 - (£7,000 × £26,000/£31,000) = £20,130
The club has to pay tax on the balance, £5,870. It doesn't have to pay any tax on the membership fees - these aren't taxable.
Find out which activities are recognised as eligible sports
Whilst your club may get various tax reliefs if it's registered as a CASC, unlike charities there are no specific VAT reliefs. However, your club may qualify for a VAT exemption for fundraising events and certain sporting activities.
The rules for whether your CASC needs to register for VAT are the same as for any business.
Find out more about how VAT applies to CASCs
If your club receives or you think it may receive income or capital gains that are not exempt from tax, or which exceed the turnover limit for the exemption - such as on trading profits and property income - you must tell HMRC Charities.
You should also tell HMRC when you use income for non-qualifying purposes. Qualifying purposes are providing facilities for eligible sports and encouraging people to take part in them. If income is used for non-qualifying purposes, the usual tax relief or exemption may be subject to restrictions and this may result in a tax bill.
In either case you will need to complete a tax return. From 1 April 2011 you will have to do this online for accounting periods ended after 31 March 2010.
CASCs are regarded as companies for tax purposes, so your CASC may have to pay Corporation Tax on its profits. If you're asked to send in a Company Tax Return you must complete it and pay any tax due on time.
If your CASC doesn't tell HMRC about non-exempt income or expenditure on time, or fails to complete a tax return on time, it may have to pay penalties.
Find out more about completing your Company Tax Return
For more help you can contact the Charities Helpline. Select option 4 for CASCs.
Contact the Charities Helpline
Registering as a Community Amateur Sports Club with HMRC
Read more about tax reliefs in the guidance notes for CASCs
Find out more about being a CASC on the CASCinfo website (Opens new window)
