Volunteer Expenses

Promoting Inclusivity and Fairness

Reimbursing volunteers for reasonable expenses ensures that volunteering is accessible to all, regardless of personal financial circumstances.

There are however some key things you need to consider when developing your approach to reimbursing expenses to ensure that you maintain the volunteer relationship and are legally compliant.

Risks of Not Reimbursing or Improperly Reimbursing Expenses

• Employment Rights and National Minimum Wage Obligations: If volunteers receive payments beyond actual expenses—such as fixed allowances or benefits—they may be classified as ‘workers’ under the National Minimum Wage Act 1998.
• This classification can entitle them to the National Minimum Wage, leading to potential liabilities for back pay, penalties, and reputational damage.
• Tax and National Insurance Implications: Reimbursements that exceed actual expenses or are not properly documented may be considered taxable income by HMRC.
• This can result in the need to operate PAYE, deduct income tax and National Insurance contributions, and potentially face penalties for non-compliance.
• Loss of Volunteer Status: Providing payments or benefits beyond reimbursed expenses can blur the line between a volunteer and an employee, leading to unintended legal obligations and liabilities.

Best Practices for Reimbursing Volunteer Expenses

• Reimburse Actual Expenses Only: Ensure that payments cover only genuine out-of-pocket expenses incurred during volunteering activities.
• Require Receipts and Documentation: Maintain records of all expense claims, including receipts, to substantiate reimbursements.
• Avoid Fixed or Blanket Payments: Do not provide fixed sums or allowances without regard to actual expenses, as this can imply a contractual obligation.
• Use HMRC Approved Rates: For mileage reimbursements, adhere to HMRC’s Approved Mileage Allowance Payments (AMAP) rates to ensure tax compliance.
• Communicate Policies Clearly: Inform volunteers about expense reimbursement policies during induction and provide guidance on how to claim expenses./li>

For more information talk to our Chatbot who can provide more detail on any of the above and help with wording for policies or expenses claim templates.

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