Are membership fees eligible for Gift Aid?

Clubs which have adopted charitable status (registered with the Charity Commission) or community amateur sports club status (known as ‘CASC’, registered with HMRC) are able to benefit from significant tax reliefs thereby making them more attractive to prospective donors.

Gift Aid

Gifts of cash by individuals in the UK are free of inheritance tax and capital gains tax. Income tax relief is also available for UK taxpaying individuals if donations are made through the Gift Aid Scheme.

There is no minimum limit for a Gift Aid donation. Subject to the award of charitable or CASC status, the charity or CASC would be able to receive such donations.

In terms of individuals making personal contributions, in practice, the charity/CASC reclaims basic rate tax (20%) on the gross amount of the gift.

As a general rule, for every £1 that is donated to the charity/CASC by UK taxpaying individuals, the charity/CASC will be able to reclaim 25p from HMRC, which means that the true value of the gift is actually £1.25.

This can represent a significant boost to the income of grassroots clubs on genuine qualifying donations, but when the majority of a club’s income constitutes players’ ‘subs’ (often paid by a parent or guardian on behalf of the participating child), is it possible to claim Gift Aid on membership fees?

Membership Fees

In order for Gift Aid to apply to a membership subscription (including for a junior member), it must be be a qualifying gift.

As a general rule, a payment which secures, in return, goods or services or provides use of facilities is not a qualifying gift; therefore if members are given personal access to the club’s facilities (including, for example, organised weekly coaching etc.), then the payment is not eligible for Gift Aid.

So, how does this work for charitable clubs in practice?

There are particular rules concerning Gift Aid on membership subscriptions for charities which can be found here in paragraph 3.37.

The conditions referred to are that the:

1. payments do no more than secure membership of the charity (i.e. allow the person to be an affiliated member)

2. payments don’t secure a right to personal use of any facilities or services provided by the charity

“Personal use” includes providing coaching or tuition to individuals, whether alone or in a group.

Guidance concerning benefits derived from donations, including membership subscriptions, is available here.

So, a payment that satisfies the above required conditions to be treated as a genuine qualifying gift if made in respect of the donor parent/guardian personally will be accepted as a gift if it’s made for their minor child; but it should be borne in mind that if any personal use of services or facilities is provided to that child, or the value of benefits is more than the relevant limit, the membership subscription will not qualify for Gift Aid.

This therefore means, in practice and depending on the form of membership documentation, that the only type of membership fee which could be capable of being eligible for Gift Aid is a contribution made in order to be affiliated with the club as a member only (with no personal use or access rights).

Members’ ‘subs’ (i.e. a regular weekly/monthly payment charged by the club in order to cover its operating costs which grants rights of access to coaching and its facilities and, if not paid, would not entitle the member to participate) would not therefore qualify for Gift Aid.

What about CASCs?

HMRC’s published guidance confirms that CASCs can’t claim Gift Aid on membership payments because members are given personal access to the club’s facilities or services.

Remember, any contribution, in order to be eligible for Gift Aid, must be a genuine donation that is freely given and is not made in return for the club providing facilities or services to play football.

Individual donors making genuine personal donations as qualifying gifts must also provide a declaration, whether written or oral (of which a record should be kept), stating that the contribution(s) are to be treated as qualifying Gift Aid donations. Donors must confirm that they are UK taxpayers and will pay enough tax to cover all the donations they plan to make that year.

This is a complex area and the club’s membership documents should address specifically what the payments constitute for tax purposes. We recommend that clubs take professional legal and tax advice when considering the format of these documents, their eligibility for Gift Aid and prior to making any repayment claim to HMRC.

If you have any queries on what this means for your club, please call our dedicated England Athletics Helpline on 0845 050 8458 or email [email protected]