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Volunteer expenses

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Manager’s view

Voluntary work is work given freely and by choice. It is a contribution of time and skills to the organisation of one’s choice. You’ll want to make sure that a volunteer will not be out of pocket as a result of work undertaken for your organisation. The question is, how should expenses be paid? What are the rules? If you are managing volunteers, you will want to be sure that you are not creating a contract of employment.

There are no hard and fast rules for what constitutes a contract of employment, but there are clues to what can be used in a court of law or at an industrial tribunal. The most compelling evidence of employment is payment for the work undertaken. So if you give an allowance to a volunteer, no matter how small, your volunteer could be deemed to be your employee, accruing a large unknown tax liability.

Organisations are legally responsible for paying the tax owed by its employees; the Inland Revenue can claim back tax for an indefinite number of years (you are required to keep records for six years). The Inland Revenue can also levy a fine equal to the amount owed and charge interest. There is also the risk of endangering access to state benefits for your volunteers. The following practices are all indicators of employment status:

  • Payments linked to time/performance.
  • Honouraria which are not honouraria.
  • Gifts in kind which are not gifts.
  • Ex gratia payments which become payments by right.
  • Graded access to benefits.
  • Training as payment.

If your volunteers are claiming jobseeker’s allowance – or any other state benefits – they run the risk of having their benefits cut if you make any payment which is not a strict reimbursement of expenses incurred while undertaking voluntary work for you. In other words, protect yourselves and your volunteers by ensuring that you reimburse genuine, actual expenses. Reimburse against receipts, where possible, using a form which shows:

  • The volunteer’s name and address.
  • Their signature indicating receipt of monies.
  • A signature of approval given by a designated person in your organisation.

There is a sample here:

Volunteer expenses form

Clip receipts to the form and keep these records to provide evidence that these are not cash payments to employees when you are audited. Remember, you may want to reward your volunteers for the contribution they make to your organisation – but to do so through providing payment runs counter to the ethos of volunteering and endangers the status of both the volunteer and the organisation.

It’s better to ensure that voluntary roles are stimulating, well-supported and meet volunteer’s aims, needs and interests. Contact your local volunteer bureau/volunteer development agency for more information on good practice.

This factsheet was produced in association with Kensington and Chelsea Volunteer Bureau.

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Last updated: Mon, Mar 31 2008 - 04:40:07 PM

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