PAYE and income tax guidance for voluntary bodies

Key points 

Voluntary organisations that make payments or provide benefits to individuals should carefully review their current arrangements considering this updated guidance. 

Revenue confirms that no tax charge arises where voluntary organisations provide certain practical supports to individuals who give their time freely and receive no remuneration, as follows: 

• Clothing and uniforms - Protective clothing, PPE, branded uniforms or sports gear required for volunteering duties (e.g. team tracksuits, workwear, equipment).
• Meals - Food provided in connection with volunteering activities, such as after training sessions, matches, charity events or during camps.
• Physio and recovery costs - Physiotherapy or recovery services (e.g. ice baths, recovery facilities) relating to injuries or physical strain arising directly from participation in club or organisational activities.
• Reimbursement of out of pocket expenses (excluding travel & subsistence), provided conditions are met i.e. reimbursements that cover the actual cost incurred, are necessary and integral to the volunteer role, and are supported by receipts.  Examples may include:
  • Small equipment or materials purchased for volunteering activities 
  • Incidental out of pocket costs required to carry out the role, and
  • Gym or fitness subscriptions paid for players where maintaining fitness is an integral part of a structured training regime.
• Travel and subsistence may be reimbursed tax free, where the reimbursement is strictly to enable the individual to carry out voluntary duties, and subject to conditions i.e. the payment must:
  • No more than reimburse the individual for the expenses actually incurred
  • Remain within Civil Service travel and subsistence rates; and
  • Be supported by appropriate records (e.g. receipts and mileage logs).

If payments exceed these limits, or if the individual receives a wage, bonus or honorarium, normal tax rules apply, and PAYE/self assessment obligations can arise i.e. the individual is not considered a ‘volunteer’ for the purpose of these tax concessions. 

• International trips for sports players and coaches - Revenue provides detailed guidance on the tax treatment of overseas trips funded by sports clubs or similar voluntary organisations for unpaid players, coaches and officials.  Broadly, no income tax implications arise where the trip is:
  • Directly linked to a training camp, tournament or approved promotional event.
  • Involves individuals who are players, coaches or officials (not partners or family members);
  • Covers only reasonable travel, accommodation and meals;
  • Does not overlap with separate tax free travel and subsistence payments; and
  • Meets specific limits, including a restriction of one overseas promotional trip per calendar year.

Where these conditions are not met, the cost of the trip is generally treated as a gift for Capital Acquisitions Tax (CAT) purposes.  The guidance highlights that social or celebratory trips, or costs relating to partners or family members, are likely to be considered a gift for CAT purposes (but may be exempt from CAT depending on the value and whether the individual had any other gifts in the year). 

The above assumes the individual is an unpaid volunteer and does not receive remuneration or payment for services provided from the voluntary body.

Tax treatment of payments to individuals from voluntary bodies

The guidance confirms the position that where a voluntary body makes payments or provides benefits to an individual not considered to be a volunteer, the ordinary rules of taxation apply, regardless of whether the role is described as “voluntary” or “amateur”. Once a payment arises, it may be taxable under Schedule (employment) or Schedule (self employment), depending on the facts and circumstances. 

When making payments to individuals, voluntary bodies must determine whether the payments should be subject to PAYE withholding by applying Revenue’s five step employment status framework (as confirmed in the Karshan judgment). This assessment applies equally to regular, casual, seasonal and part time roles, as outlined in part 05-01-30, "Revenue Guidelines for Determining Employment Status for Taxation purposes".

The guidance reinforces that fixed payments, per diems, honoraria or “gratuities” are likely to be taxable, even where individuals view their role as voluntary. 

Our view

Revenue’s updated guidance is a welcome and practical development for the voluntary and sporting sectors, providing long needed clarity on areas that have historically caused uncertainty in practice. In particular, the manual recognises the reality of how volunteers operate and confirms that reasonable, genuine supports can be provided without creating unintended tax consequences.

That said, the guidance also makes clear that the line between volunteering and taxable activity can be crossed more easily than many organisations realise. Flat rate payments, recurring allowances and loosely defined “expenses” remain high risk tax compliance areas, particularly where governance structures are informal or documentation is limited.