Volunteer Expenses

It is good practice to reimburse volunteers for the expenses they incur as a result of volunteering for your organisation. Volunteering should not cost volunteers money.

However many volunteer involving organisations are worried about the way in which they reimburse their volunteers. The initial pages examine best practice for organisations when reimbursing volunteers. The rest of this pack looks at specific areas of volunteer expenses including, volunteers who are receiving social security benefits, the reinbursing of childcare expenses, issues around taxation, how the National Minimum Wage may impact on volunteering and issues covering expenses for volunteers who have caring responsibilities.

Best Practice

As volunteers don’t have a contract like paid staff the grievance and disciplinary procedures for staff can’t apply to volunteers as well. Giving volunteers access to some or all employment rights risks creating a contract with your volunteers. So, separate policies for staff and volunteers are needed. Although they need to be different, it’s important to make sure that the process for volunteers does not contradict anything that is in place for staff.

All volunteers should be reimbursed genuine out-of-pocket expenses i.e. the exact amount volunteers have spent in the course of their volunteering. The expenses can cover:

  • travel to and from the place of volunteering
  • meals taken while volunteering
  • care of dependents (including children) during volunteering,
  • postage, phone calls, etc
  • travel in the course of volunteering
  • cost of protective clothing.

A claim form should be drawn up detailing the expenses. Keep it brief and only ask for relevant information, e.g. names, dates, amounts and signature of the volunteer and person authorising the payment.

Organisations should as far as possible ask for and keep receipts from each volunteer. These receipts should be attached to the expenses claim form.

Organisations can establish upper limits on things like lunch. For example, if the upper limit for lunch is £5 this means that volunteers should be reimbursed the exact amount they have spent on lunch but it should be no more than £5.

It is important that volunteers know how to claim their expenses and that they are reimbursed quickly.

If organisations follow this model of best practice it avoids confusion i.e.

  • no employment contract will be said to exist
  • volunteer’s social security benefits will not be affected
  • volunteers will not be liable for tax.

Mileage

Volunteers should be reimbursed for any mileage expenses they incur. This can mean:

  • Travel to and from the place of volunteering
  • Travel undertaken during volunteering e.g. transporting clients, going to meetings.

The amount of money reimbursed for mileage should be based on the Authorised Mileage Rates as allowed by the Inland Revenue. The advantage of using these rates is that your organisation and/or your volunteers will not be liable for tax. You should check these rates yourself with the Inland Revenue for any changes that may be made, visit www.hmrc.gov.uk

When volunteers carry passengers as part of their voluntary work, they can claim an additional 5p on top of the authorised mileage allowance.

Volunteers should be asked to complete an expenses claim form, which should be checked and signed by your organisation.

Payment of flat rate expenses

Some organisations pay volunteers a flat rate of £x per week to cover expenses. Many organisations find this method simplifies administration procedures. Organisations who choose to reimburse volunteers flat rate amounts must get permission from the Inland Revenue.

However if volunteers are making a profit i.e. receiving more than the actual amount that they were out of pocket in the first place, no matter how small, there can be implications in terms of affecting welfare benefits, implying the existence of an employment contract and making the volunteer liable for taxation. If your organisation does decide to give volunteers a fixed or flat rate amount there are some steps you can take to minimise the risk:

work out a realistic, reasonable amount for each volunteer based on their individual circumstances, and be clear about exactly what you intend the money to cover, do not leave amounts unaccounted for (e.g. as a bonus or thank you).

Volunteers, Expenses and Social Security Benefits

Provided you follow the best practice previously outlined, the receipt of volunteer expenses should not effect any benefits volunteers receive. However there are certain rules and other information regarding benefit legislation that should be taken into account when reimbursing expenses to volunteers who are receiving benefits. This should not be a barrier to volunteering for volunteers or a barrier to involving volunteers in receipt of benefits. The rule of thumb is that:

  • Volunteering will not affect a person’s entitlement to benefits as long as they are only receiving the reimbursement of genuine out of pocket expenses
  • There is no limit to the amount of hours a person can volunteer when they are receiving benefits

General Guidelines when dealing with volunteers who receive benefits

Organisations should:

Make contact with your local social security office and let them know about your organisation, what your aims are and how you involve volunteers.

Draw up a letter which can be adapted for each volunteer and sent to each volunteer’s local social security office which will:

  • Clarify that the volunteer will be carrying out a role which would not normally be done by a member of staff and for which they will be receiving no payment.
  • Inform the social security office of the nature of the expenses that the volunteer is likely to receive. That is, they are the reimbursement of genuine out of pocket expenses. Include a list of the things expenses will cover.
  • Point out, that if the volunteer will be receiving training that it is training which is essential for them to carry out their role.

Try to identify a person in the social security office who you can contact when you need information.

Find out what benefits volunteers receive and provide them with information on how volunteering may or may not affect them.

Make it clear to volunteers that it is their responsibility to take the necessary steps required by the social security office before they begin volunteering.

Volunteers who receive benefits should:

Talk to their local social security office before they begin volunteering to find out exactly what impact volunteering will have on their benefits as each individual case will be different. Volunteers should have the necessary information to do this and ensure they have written documentation from the organisation to back up what they are saying.

Payment in Advance

In September 2001 social security legislation changed to allow organisations to pay volunteers expenses in advance of expenditure without it affecting any benefits the volunteer might be receiving. The benefits that this will apply to are Jobseekers Allowance, Housing Benefit and Income Support. This means that volunteers will not be out of pocket at any stage. However your local social security office is likely to require evidence of the amount and nature of the expenditure. It will be quicker for all concerned if the organisation supplied this information to volunteers as soon as they begin volunteering. The volunteer can then pass this on to their social security office. Overleaf is a sample of the information organisations should provide.

Volunteers, Expenses and Taxation

Provided you follow the best practice previously outlined any expenses that your volunteers receive should not be subject to tax or National Insurance.

If your organisation reimburses only genuine out of pocket expenses there is no tax liability. The expenses which the Inland Revenue allows to be reim-bursed are:

  • travel to and from the place of volunteering
  • meals taken while volunteering
  • care of dependents, including children, during volunteering,
  • travel in the course of volunteering
  • cost of protective clothing necessary for volunteer role
  • cost phone calls, postage etc if volunteering from home.

“Service to others is the rent you pay for your room here on Earth.”

– Muhammed Ali

Further Support Available

Stockton Volunteers is dedicated to supporting volunteer involved organisations in Stockton-on-Tees. Further support is available through our website where you can:

  • Download more Good Practice Guides
  • Find out more about the Stockton Volunteers Good Practice Kite Mark
  • Place volunteer advertisements
  • Get information about our latest Stockton Volunteers Partnership Meeting
  • Contact us for advice and support on your volunteering programmes
  • Get advice on policies and procedures for volunteering

The Stockton Volunteers Good Practice Kite Mark is awarded to organisations who demonstrate commitment to supporting and nurturing their volunteers.

Recognised across County Durham and Stockton-on-Tees, the Stockton Volunteers Good Practice Kite Mark follows the ethos of Volunteer England and National Council for Voluntary Organisations (NCVO).