Community and charity subscriptions may be able to be treated as donations

Are you running a Community Amateur Sports Club or a charity which runs a sports club/association? Are members still paying their subscriptions?  If so, this information might be of interest. 

If you are a sports club and you have members who are willing to keep on providing funds (even though the facility is closed), HMRC have confirmed that the money provided could now validly be treated as a donation (and potentially one on which gift aid can therefore be claimed), which can add up to 25% to the value of the amount received (i.e. donated). 

What have HMRC confirmed?

HMRC have confirmed to the Charity Tax Group that it would be possible to treat amounts which are being paid by members, for which they aren’t receiving anything, as donations rather than subscriptions. This is not normally the case. Usually, subscriptions entitle the members to receive access to facilities etc. and so are treated as trading income which are not capable of being treated as a donations (and so subscriptions are amounts on which gift aid claims cannot be made). 

The gist of the communication from HMRC is that the sports club can validly agree with the persons that the amounts that they receive the monies from, that:

  • The subscription element is lower than usual (due to restricted availability of facilities etc) and the balance is a donation or;
  • The subscription has been suspended, and the person is simply making a regular donation whilst the membership is suspended.   

What does this mean for different clubs?

For clubs who have ongoing maintenance of facilities to keep up, then it may be most appropriate to reduce the membership fee to the level that covers the maintenance costs and then ask members to donate an amount which takes them partly, or wholly, back to their prior monthly subs.  The donated element can then be subject to Gift Aid.  

For clubs who have mothballed their facilities entirely, then suspending membership and asking for voluntary amounts from members just to be made as donations may become appropriate. 

What have the Charity Tax Group confirmed?

The quote below was published by the Charity Tax Group this week.

It clarifies that, provided that the members aren’t receiving anything for the money they provide (which will be the case if they continue to pay over the full amount which is equivalent to their “subscriptions” but cannot use any of the facilities) then HMRC agree it will be possible, in the correct circumstances, to treat the amounts as donations.

“HMRC officials have provided the following update to the Charity Tax Group in respect of Gift Aid on donations freely given to charities and CASCs while membership subscriptions have been suspended.

We are aware that many Community Amateur Sports Clubs (CASCs) and charities have suspended the collection of membership subscriptions in light of the COVID-19 pandemic but some individuals are making voluntary donations instead in order to support their club.

It is probably worthwhile reminding you that that there is no barrier to Gift Aid being claimed on such donations, provided they are freely given, no benefits arise in consequence of that specific donation (either now or in the future) or, if provided, they fall within the legislative limits, and a Gift Aid Declaration is obtained.

In circumstances where clubs have reduced their subscription rate, any amounts freely donated over and above this reduced amount would also potentially be eligible for Gift Aid. In all cases it must made clear to the members that the amounts voluntarily given by them are not subscriptions, carry no subscription rights and will be treated as donations on which the CASC or charity will claim Gift Aid.

The personal tax implications of making a Gift Aid donation will also need to be explained to donors.”

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