Page20 - Volunteer Expenses

With the Government stressing the importance of a thriving Third Sector and the proposed Welfare Reform Act seeking to encourage those who are out of work to undertake voluntary work you might suppose that tax and benefit rules would also work towards these aspirations writes our business and tax correspondent.

From our regular feature 'Round the voluntary groups' (page I7) it is evident that volunteers are widely sought and warmly welcomed and indeed evidence shows that numbers of volunteers are increasingly doing work which can be rewarding to both the volunteer and the local community.

Not out of pocket

Voluntary work as its name suggests is for the most part unpaid but often volunteers are offered reimbursement of their expenses and particularly for those on low income or benefits do ensure that the gift of their time does not put them out of pocket. However there are some surprising tax and benefit rules which can catch you out.

Gift aid rules

Looking first at tax issues an unexpected bonus is that a charity might actually benefit more if those who may have thought that asking for expenses to be reimbursed would be like taking the money away from the organisation actually do take up the payment of the expenses and then separately donate a similar amount to the charity. So long as you are a taxpayer you can use the gift aid rules to enable the charity to reclaim tax from the Government on the basis that the amount you have gifted is net of basic rate tax. So if you pay over say £40 to the charity it can reclaim £10 making the total value of the donation £50 in their hands.

Mileage rates

lf you are not receiving benefits then any expenses you reasonably incur are free of tax. Problems can arise if instead of receiving reimbursement of your actual expenditure you are given a round sum allowance or flat daily rate. Unless the organisation has cleared this arrangement with the tax office you might find yourself being taxed on the entire sum you receive. Mileage payments for using your car whilst doing volunteer work will not be taxed if they are within HM Revenue & Customs approved rates currently, for cars, 40p for the first 10,000 miles and 25p per mile thereafter. 

Check first

As previously mentioned the Government are keen for those who are currently out of work to consider volunteering but then put up some barriers in the way of this good initiative. lf you are in this position then before you start any voluntary work you must check with the local Jobcentre Plus ofhce. lf you are claiming jobseekers allowance you must still keep on looking for paid work, be available at 48 hours notice to attend interviews and be prepared to start working within one week. All expense payments received must be declared although most will not result in a loss of benefit. Similar rules apply if you are on incapacity benefit or income support. Further information on volunteering and benefits can be obtained from the local Jobcentre Plus office or on volunteering generally by looking at