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If your sports club registers with HM Revenue & Customs (HMRC) as a Community Amateur Sports Club (CASC) you may be able to benefit from various tax advantages when trading.
Your club may be exempt from paying tax on any trading profits you make, if the turnover from trading activities is no more than £30,000. If the turnover exceeds this limit, your club won’t qualify for the exemption and you’ll have to pay tax on the full profits - not just those over the limit.
This guide explains your club's responsibilities for tax and VAT when carrying out trading and business activity.
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If your club sells goods or services it may be carrying out a trade that may or may not make a profit. A club has to pay tax on its trading profits, but there are exemptions available if:
Any profits from sales of goods and services to members come from the members themselves, so provided they’re used for the members’ benefit, you won’t have to pay tax on them as they’re not considered a trading activity.
A sports club runs a members-only bar that generates £20,000 in turnover. It won't have to pay tax on any profits it makes - even if the turnover increases to over £30,000 as it is trading with its club’s members.
If your club sells goods or services to non-members, it is carrying out a trade. Sports clubs normally have to pay tax on any profits from trading activities like these.
However if your club is registered as a CASC, you don't have to pay tax on your trading profits if the turnover from trading activities is no more than £30,000.
A golf club that is a registered CASC generates turnover from charging green fees to non-members. Its turnover from this trading in a year is £28,000. The club uses all the income for maintaining the club facilities. The club doesn't have to pay Corporation Tax on this income because the trading income is below £30,000. If the turnover exceeded £30,000 then Corporation Tax would be due on the full amount of the profits after expenses. See next section.
If your turnover from trading activities with non-members is over £30,000 you don't get any tax relief on your trading profits. You’ll have to pay tax on the full amount, not just on the profits you made on the turnover that's over £30,000.
A sports club that is a registered CASC has a turnover of £50,000 from selling sporting merchandise to non-members in its shop - making a profit of £10,000. It has to pay Corporation Tax on the whole £10,000 profit because the turnover is more than the £30,000 limit allowed to claim tax relief.
If you register your club as a CASC part way through an 'accounting period', the turnover limit is reduced. An accounting period is the period you have your accounts prepared for - usually 12 months. So if you registered half way through an accounting period, the turnover limit would be reduced to half, or £15,000.
The relief for trading profits can't be used to cover income that you get before the date you register as a CASC. You'll have to pay tax on the full amount.
In order to claim the tax relief, your club must use its income for 'qualifying purposes'. 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 - known as 'non-qualifying expenditure' - the reliefs will be restricted and you may end up with a tax bill.
Whilst your club may get various tax reliefs if it's registered as a CASC, there are no specific VAT reliefs for CASCs. However, your club may qualify for the VAT exemptions for fundraising events and certain sporting activities.
If your CASC makes taxable business supplies of goods or services and the turnover from this source is above the VAT registration threshold, the club will have to register for VAT. If the turnover from making taxable business supplies is below the threshold, you can choose to register for VAT if you want to.
If you have no business activities or your only business activities are exempt from VAT you can’t register for VAT.
For more help you can contact the Charities Helpline. Select option 4 for CASCs.