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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Voluntary organisations: unpaid office holders

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. See EIM71105 for how this works in practice for participants in clinical trials.

If expenses are paid that do more than reimburse the costs incurred, or are at scale rates (see EIM05200) that cannot reasonably be regarded as merely a reimbursement of what they spend, the voluntary workers may be receiving remuneration for their services. In that case, the payments will be taxable as employment income if it can be shown that they hold an office or employment. If they do not hold an office or employment, the payments may be Miscellaneous Income.

Unpaid office holders

The same principles apply in relation to:

  • officials elected under the constitution of bodies such as sports clubs and social clubs and
  • people who undertake unpaid work within normal commercial organisations, or within areas such as the health service, governing bodies of Further Education Colleges, or the courts.

Such people may well hold an office. But they will not have any taxable earnings unless it can be shown that the office holders are being remunerated for their services. If the sums involved are small, you should not spend time examining the amounts paid to such officials to compensate them for the extra expenses they incur as a result of holding office.

These principles are intended to apply to small amounts of travelling and subsistence payments. However, if the expenses/reimbursements amount to £8,500 or more a year they will be treated as earnings by virtue of Section 72 ITEPA 2003.

If such an unpaid worker receives a financial loss allowance (see EIM01120) that allowance will not cause an otherwise non-taxable reimbursed expense to become taxable.

Employees of voluntary organisations

The above comments do not apply to ordinary employees of voluntary organisations who are engaged under contracts of employment. Payments to such employees will be chargeable to tax in accordance with normal principles (see EIM00510 onwards) and PAYE should be operated as necessary.