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Are there Legal / Tax implications for Volunteer Reward Schemes?


When looking to reward your volunteers it is important to be aware of any implications this may have to both your organisation and also to the individual. 

The general view from HMRC is that only out of pocket expenses are allowed, and where there is any potential for benefit or reward involved, there is the possibility of tax implications and forming employment contracts, i.e. reward could be classed as benefits in kind and then individuals having to be subject to being paid at the national minimum wage with additional employer obligations. 

The links below are a good starting point, noting the rewards part as noted in example 4 of the first link and then what’s included as an incentive award in the second link, which although employee related, is still applicable. 
  1. https://www.gov.uk/volunteering/pay-and-expenses
  2. https://www.gov.uk/guidance/employee-incentive-awards
In brief if the reward scheme could be seen as providing volunteers with rewards over and above ‘out of pocket’ expenses it could therefore imply the volunteer is an employee (and having the right to minimum wage pay) rather than a volunteer and the benefits being taxable.

In English law any relationship between a volunteer and volunteer manager has no legal definition. However, volunteer co-ordinators should be careful when deciding whether to use incentives to attract volunteers, as providing these could imply that ‘consideration’ exists and that there is a contract between co-ordinator and volunteer. This is problematic as it could lead to the volunteer co-ordinator being judged to have broken the law.

As a club you can also contact the DAS helpline for advice - 0117 934 2111.


FAQ Information
Views: 2411
Created: 17.02.2018
Updated: 04.11.2019
Answer-ID: 37