Professional November 2021

Payroll

If the volunteer works on a voluntary basis for no reward or payment, there may be no relationship in place which HMRC could challenge as an employment, although anything provided by way of reward could change the status fundamentally. However, even if there is no employment relationship, please note that any income (profit or reward) a volunteer receives is still taxable in their hands and they are expected to disclose to HMRC this additional source of income under self-assessment. Unpaid officeholders and expenses Many clubs, societies and voluntary organisations depend on unpaid volunteers to act as a chair, treasurer, secretary etc. Generally, such roles continue and could be seen as ‘offices’ for the purposes of tax.

However, they will not have any taxable earnings unless it can be demonstrated that they are being remunerated for the services provided. HMRC guidance states that its officers should not spend time examining small amounts of travel and subsistence payments, although this would not apply in the case of reward payments or expenses that clearly include a profit element. An example of an unpaid officeholder is a special constable. HMRC has confirmed to PSTAX that if special constables receive bonus payments or other payments or benefits, they could lose their unpaid officeholder status. We have, however, been able to agree with HMRC in a specific case that a £20 voucher given to special constables during the COVID-19 pandemic was allowed, without it having an impact on their volunteer status. Please note this was in

extremely specific circumstances and cannot be taken to be a blanket exemption.

National minimumwage (NMW) / national livingwage (NLW) The NMW/NLW legislation does not apply to volunteers if engaged by a charity, a voluntary organisation, an associated fund- raising body or a statutory body, but does apply if the volunteer receives any form of reward or payments above expenses actually incurred. Therefore, care should always be taken to ensure there are no breaches of the appropriate rules and advice should be taken in cases of uncertainty. Summary Volunteers are allowed to claim reasonable out-of-pocket expenses, even for home to work travel, without incurring a tax and NICs liability, but they are not permitted to receive payment for their time or work carried out. If they do receive a reward or are paid expenses that exceed the actual and reasonable costs incurred, they risk losing their volunteer status and, consequently, they could be liable to tax and NICs on all expenses received. Professional advice should always be taken in cases of doubt. ■

...all expenses and benets paid will potentially be subject to a tax and NICs charge if HMRC considers there is an employment relationship or ofce holding...

Do you want to fast-track your learning?

If you’ve completed either the Payroll Technician Certificate or the Certificate in Pensions Administration, or have at least two years’ experience as a payroll or pensions professional and are thinking of moving onto one of our foundation degrees, then the Recognition of Prior Learning online assessment could help you to access year two of the foundation degree.

To find out more, email enquiries@cipp.org.uk or call 0121 712 1044

*Price correct at time of print

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| Professional in Payroll, Pensions and Reward |

Issue 72 | July / August 2021 Issue 75 | November

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