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HMRC internal manual

Employment Income Manual

Research volunteers, lay participants and participants in clinical trials

See EIM71100 for general guidance on the treatment of volunteers and unpaid office holders.

The former Inland Revenue agreed the following principles and procedures with the British Universities Finance Directors Group on 13 October 2004. As well as covering specific issues in the situations specified it illustrates the approach that should be taken with volunteer workers.

Research volunteers, lay participants and participants in clinical trials

In the course of undertaking research, particularly social science or medical research, volunteers are required to take part in tests, submit to measurements or be interviewed. They are usually paid a small sum to cover out of pocket expenses and as compensation for the time spent. Some of the volunteers may be members of staff of the university, but their participation in the research is not part of their duties of employment and they do it in their own time and are under no obligation to take part.

Closely related to the above is the use of “lay” people or “users” in research. Here the people in question are invited to attend meetings to give their views on various matters to inform the research process and direction. Often they will be former or current patients, representatives of particular groups such as retired people, or representatives from charities. Payment is made to them for their participation in the meetings.

Tax consequences for the university

In the circumstances above, HMRC agrees that the amounts paid to those concerned are unlikely to fall within the definition of “earnings” for PAYE or NI purposes. No employment relationship exists and as such PAYE and NIC would be inappropriate.

Under Section 16, Taxes Management Act 1970, HMRC is entitled to ask for details of payments to non-employees at their discretion; but they would not routinely ask for details for small payments such as these.

Tax consequences for the individuals receiving the payments

There will be no tax or NIC liability arising on the individual if the sums received do no more than reimburse the individual’s reasonable costs of participating in the trial or research, including costs of travel and subsistence.

However should the sums paid exceed those reasonable expenses then the excess may fall to be chargeable to tax as Miscellaneous Income, potentially giving rise to personal tax liabilities of the individuals which should be notified to the Inland Revenue under Self Assessment.