EIM71120 | Voluntary office holders: payments of private expenses

S299B ITEPA 2003

Before tax can be charged under the provisions relating to employment income there must be:

• either an office or an employment

and

• earnings from that office or employment - this includes amounts treated as earnings within the benefits code

Voluntary office holders are individuals who have a role specified in statute, and who voluntarily give up their time for organisations without any entitlement to payment or benefit in connection with carrying out the duties of the office, but whose role is as an “office holder”. Such roles include magistrates, special constables or elected officials or trustees of a charity. These are permanent, substantive positions that exist regardless of the person occupying them at any one time.

Where an individual holds an office on a voluntary basis, HMRC’s long-standing practice is that no charge to tax arises in respect of the payment or reimbursement of reasonable private expenses, provided the voluntary office holder does not receive any pay or other reward for carrying out the duties of their office. This means that voluntary office holders are in a similar position to volunteers in the treatment of paid or reimbursed private expenses.

From 6 April 2020 this previously concessionary practice has been legislated for to create a statutory exemption. This provides that no liability to Income Tax arises in respect of the payment or reimbursement of reasonable private expenses to a person who holds a voluntary office if the payment is in relation to the carrying out of the duties of that office.

Legislating for the concessionary practice does not change the position for employees of voluntary organisations who are engaged under contracts of employment, to whom the normal rules for charging tax and NICs apply.