It's much better to be clued up about tax, than stick your head in the sand.
This section will help you get to grips with the basics. You can find out what's relevant for your group and what your responsibilities are.
So let's go...
Don't be taxed by tax
Business rates
What's it all about?
Business rates are also known as national non-domestic rates (NNDR). They're payable by businesses on the property they occupy.
They're usually one of the most expensive outgoings for clubs with facilities.
Your local authority, also known as your billing authority, will send you an annual bill in advance. Payment is normally due in 10 monthly instalments.
The amount you need to pay will depend upon the rateable value of the property.
Relief on business rates
Your club could be eligible for relief from some or all of the costs.
This could apply if:
- Your local authority offers discretionary relief (contact them to see if you qualify).
- Your club is a charity or community amateur sports club, then you'll get 80% relief (and maybe discretionary relief up to 100% from your local authority).
Managing your rates bill
Do your rates seem too high?
You could:
- Review your current bill to make sure you aren’t being overcharged
- Be aware that improvements to your club's facilities, such as new floodlights or a clubhouse extension, may impact on your rates bill.
- Explore whether there are reliefs available for your club.
- Talk to your national governing body.
- Get professional advice.
Corporation tax
Will we need to pay this?
You may need to file a corporation tax return if:
- You're a limited company or an unincorporated association.
- You trade and make a profit.
This could mean that you need to pay corporation tax.
What's exempt?
Some income may be exempt, under the 'mutual trading' concept. That's income from members, such as subscriptions, or bar income, where the club isn't seeking to make a profit. Any surplus must be used for the members' benefit.
What's taxable?
Taxable income could include:
- Trading income from non-members (such as bar sales).
- Investment income (such as bank interest).
- Property income (such as rent received).
- Chargeable gains (for example, on the sale of land).
Income or gains may be offset by certain reliefs or allowable expenses.
PAYE & NIC
What's it all about?
Pay as you earn (PAYE) is the system that HM Revenue & Customs uses to collect income tax and national insurance contributions (NICs) from employees’ pay as they earn it.
You'll need to know the employment status of everyone in your team - whether they're a volunteer, employed or self-employed.
If you've got employees
If your organisation has employees, you may have to deduct tax and NICs from their wages and pay employer’s NICs (Class 1). That's an additional cost for your club.
There are also legal issues including the national minimum wage and the rights of employees.
This area is complex, so get professional advice. A number of sports clubs have been fined by HM Revenue & Customs for failing to account for PAYE and NIC.
Sale of land
Should you sell off land?
Some organisations choose to raise funds by selling off land.
If you're considering this, then there may well be tax implications, in particular VAT and corporation tax issues.
Tax relief may be available to reduce or defer any tax due.
You may be able to restructure your club, for example as a charity or community amateur sports club, so that you're exempt from gains on the sale of assets.
Ask your national governing body for support and seek professional advice.
VAT
What's it all about?
If your organisation is VAT registered, then you'll have to charge VAT when you supply certain goods and services in business transactions.
Are you planning a major project?
VAT can become an issue if you're considering a large capital project (such as a new facility).
Some of the costs may be exempt from VAT, but other won't be. Each situation is unique.
If you're planning any major project, then seek professional VAT advice.
