Volunteering, tax and national insurance

If volunteers only get reasonable out-of-pocket expenses then this will not have tax implications.

Payment that is more than out-of-pocket expenses will be treated as taxable income, so income tax and national insurance regulations will apply. These rules will apply even if you describe payments with terms such as:

• expense
• pocket money
• sessional payment
• stipend.

As well as such payments having potential implications for the legal status of the volunteer, the payment would also need to be taxed. 

Volunteers should be reimbursed for expenses incurred in the course of their volunteering. These costs should be genuine and have been necessary for the role. Adequate records should be kept of the expenses eg receipts, travel tickets or other evidence.

These can include the sort of expenses for which employees would be reimbursed, eg:

• travel while volunteering
• post and phone costs
• the cost of protective clothing or special equipment needed for the role.

These can also include volunteer-specific expenses for which employees would not be reimbursed, eg:

• travel to and from the organisation (or wherever the voluntary work is taking place)
• meals while volunteering
• care of dependants (eg children or older parents) while volunteering

However, volunteer-specific expenses can only be reimbursed tax-free for genuine (ie unpaid) volunteers. So if ‘volunteers’ get payment or income from the organisation over out-of-pocket expenses, they will be taxed on volunteer-specific expenses.

Volunteers should be asked to give the organisation their receipts, travel tickets or similar evidence for expenses. Reimbursement of out-of-pocket expenses does not have to be entered on the tax form P11D, organisations should be able to show that they were not giving volunteers taxable income. It is helpful to have an expenses claim form for volunteers, which can be kept with the receipts and other evidence of the costs incurred by volunteers.