If you have volunteers working for your charity or Community Amateur Sports Club (CASC), you might choose to reimburse any reasonable and proper expenses they incur whilst carrying out their duties such as travel costs, post, or photocopying charges.
Volunteers might choose not to claim expenses, or to pay back the expenses they claim to your charity or CASC.
This guide explains the circumstances in which Gift Aid can be applied to expense payments paid back to your charity or CASC as a donation.
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Gift Aid only applies to gifts of money. If volunteers decide to support your charity or CASC by not claiming the expenses they are entitled to, Gift Aid can't be claimed on the amount of expenses foregone -as they are not gifts of money.
Where your charity or CASC physically pays the expenses to a volunteer, they are free to keep the money or may choose to donate some or all of it back to your charity or CASC. Gift Aid can only apply when the volunteer makes an actual payment of money to your charity or CASC.
For the payment to qualify, the other rules of the Gift Aid scheme must be met including ensuring that the limits on the value of any benefits given to the volunteer in return for donations are within certain limits.
For audit purposes, it is preferable that at least one of the payments by your charity or CASC, or by the volunteer, is made by cheque that has been clearly and properly recorded.
The 'value' of a volunteer's time as a 'donation in kind' does not qualify
for Gift Aid.
Find out the more about the rules of the Gift Aid scheme
Providing benefits in return for donations: rules and limits
Gift Aid record keeping and audit requirements
A volunteer is not likely to have a formal contract of employment with your charity or CASC, so the expenses they claim whilst carrying out their voluntary work will not be liable to Income Tax. Neither will the reimbursement of any extra costs that might be incurred for example, travel expenses between home and work.
If your charity or CASC pays expenses to a volunteer which do more than reimburse costs incurred, or are at a rate which can't reasonably be regarded as simply a reimbursement of what they spend, HM Revenue & Customs (HMRC) may consider the voluntary worker to be receiving a wage or salary for their services. In that case, they could be liable to Income Tax and National Insurance contributions if it can be shown that they hold an office or employment.
For more information about expense payments to volunteers contact the Tax Office that deals with the PAYE (Pay As You Earn) for your charity or CASC.
Volunteer workers should contact their own Tax Office for more information about their status of employment.
Expense payments made to volunteers within the rates of the approved mileage allowance payments scheme are not taxable.
Find out more about approved mileage rates
Find out more about tax for volunteer drivers
For more help you can contact the Charities Helpline.
Contact the Charities Helpline
Read more about voluntary workers' expenses in the detailed guidance notes
