More information

Tax Relief

Community Amateur Sports Clubs

Background

  • The Voluntary Sector is a hot topic for the Government, which announced in July 2002 in the Comprehensive Spending Review that the Sector is to receive £125 million over three years
  • In the East Midlands there are over 100,000 volunteers active in sport
  • In November 2001 the Charity Commission announced that it would recognise as charitable "the promotion of community participation in healthy recreation by the provision of facilities for the playing of particular sports".  In April 2002 the Charity Commission and the Minister for Sport announced improved guidance for clubs wishing to become charities
  • In April 2002, in the Budget, the Chancellor of the Exchequer introduced a package of tax reliefs to support Community Amateur Sports Clubs (CASCs) as an alternative route for those CASCs unable or unwilling to apply for charitable status.

 

Should  your club apply?

  • A club can now apply for charitable status; apply for CASC status to the Inland Revenue or do nothing
  • Only a financial adviser such as an accountant can give expert advice based on the individual circumstances of your club
  • As the schemes are rolled out experience of clubs who do apply will help to make the options and benefits clearer as different club circumstances are tested
  • Both schemes are aimed at helping clubs that provide a service to the whole community.

Charitable Status

  • Clubs are eligible to apply for charitable status so long as
  • It is genuinely amateur that is, it is a not-for-profit organisation, and no-one stands to benefit financially from membership;
  • Its primary purpose is to promote healthy recreation that is, that it promotes community participation in a sport or activity which is beneficial to physical health; and
  • It has open membership policies which, within reason, allow anyone who wishes to join and use its facilities to do so
  • The major benefit of charitable status is mandatory rate relief at 80%.  This is particularly helpful if your club does not already receive discretionary rate relief or receives it at a lower rate.  There is however a restriction on the qualifying rateable value so large clubs may not benefit
  • Other benefits to becoming a charity include tax exemption for fundraising income; and payroll giving, Gift Aid and other tax reliefs for individual and corporate donations
  • The application process is relatively complex and the status of your club is likely to be scrutinised closely, which may require a change of constitution
  • The application form is obtainable by contacting the Charity Commission although they advise phoning for Guidance Notes first
  • The process is irreversible and any property belonging to the club would become charitable property
  • The operation of a bar will need to be separated in the club accounts
  • Failing to comply with the regulations of the Charity Commission could result in back tax being reclaimed
  • The compliance regime of the Charity Commission is not particularly onerous but could be difficult if disagreements occurred.

Inland  Revenue application for CASC status

  • The Inland Revenue are looking to register as many clubs as possible provided they have open membership and are non-discriminatory.  Single sex clubs from appropriate sports eg netball, womens hockey or ethnic minority based clubs are likely to qualify.  Clubs that have different rules for members will not be able to apply
  • There is a simple application process - a one page form downloadable from the Internet.  Latest accounts, constitution and rules have to be supplied with the application form by post
  • There is no mandatory rate relief
  • After the application is submitted the Inland Revenue have stated they will give advice about any constitutional changes that may be needed to allow a club to qualify
  • The compliance regime will be light touch with only random checks as now
  • Large donations or major changes in accounting procedures may attract closer scrutiny
  • A change in the objectives, constitution or operation of the club may result in the club no longer qualifying eg if a club decides to pay players.  It should be possible to agree an operational date with the Inland Revenue. It is possible that back tax may be reclaimed.

General Points

  • All trading within the club is called mutual trading and is not taxable at present. There is tax relief on the first £15000 of profit on any events for the general public or bar profits from non-members. This would normally be taxable
  • There is also tax relief on income from hiring out your clubhouse.
  • Donations to the club can be considered as Gift Aid. This means that with a minimum amount of paperwork it is possible to reclaim 28p for every £1 donated from the Inland Revenue for basic rate taxpayers and more for higher rate taxpayers
  • Clubs which pay their players are excluded although in the CASC case the Inland Revenue will look at the primary purpose of the club eg a large community club with lots of teams but who pay a modest amount to a few first team players could still be eligible.

Further information

For detailed guidance, you will need to approach the Charity Commission enquiry line 0870 333 0123 or www.charity-commission.gov.uk/registeredcharities/sport.asp and/or the Inland Revenue 0131 777 4147 or http://www.inlandrevenue.gov.uk/casc/index.htm
 

For general guidance and information you can contact either Robert Knott 0115 9823606 or John Palmer 0115 9823615 at Sport England, East Midlands regional office.  Please note we cannot visit, or provide detailed advice for individual clubs.