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Finance Bill 2020: Income Tax and the treatment of expenses for voluntary office holders

Caroline Harwood, Partner, Head of Share Schemes and Employment Tax 
17/07/2019
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What is the change?

Long standing practice has been that no tax charge arises on the payment or reimbursement of reasonable expenses provided to voluntary office holders as long as these are not in the nature of a reward. This puts the officers on the same basis as other volunteers.

New measures are being introduced in the Finance Bill 2020 to put this treatment on a statutory footing rather than relying on the current concessionary basis.

The certainty this new legislation will bring is very welcome but no day to day impact will be felt by voluntary office holders or the organisations where they work as the treatment of their expenses should not change.

Who is affected?

HMRC state that the total number of voluntary office holders is unknown.

However, we do know that alongside the 11,500 special constables and 21,500 magistrates in the UK who are voluntary officers, there are also office holders in other parts of the voluntary sector which includes 168,000 registered charities and 7,000 Community Amateur Sports Clubs. The number of individuals holding a volunteer position in a political party is unknown.

What is a 'volunteer office holder' for these purposes?

There is no definition of volunteer office holder in the new draft legislation. Therefore we look to the case law tests which define an officer for general purposes.  

The basic definition of an office is a ‘permanent, substantive position which has an existence independent from the person who fills it, which is filled by successive holders’ subject to the proviso that the proviso that a post need not be capable of permanent or prolonged existence but it must have endurance, at least, beyond the tenure of one man.

Volunteer offices include magistrates, elected trade union secretaries and special constables in the police force, for example.

What is our view?

We can only welcome a change which puts a concessionary beneficial treatment into law, giving certainty to all parties.

How we can help?

Please contact Caroline Harwood or Simon Herbert for any further information or if you would like to discuss this further.

Contact us

Caroline Harwood
Caroline Harwood
Partner, Head of Share Plans and Employment Tax
London