Millions of us have been inspired by this year’s summer of sport, from the Olympics to Wimbledon to the Open in Troon and the Women’s Open in St Andrews (and even by the initial euphoria of the Euros, if not the results!). And not just to watch, but also to step up our own game and the places where we play it.
Most of the sporting triumphs we’ve seen on screen over the past few weeks had their origins at a local club, whether it was tennis, golf, swimming, athletics, archery or anything else. So it’s important that those involved in local grassroots sport take every opportunity to support their own club’s future. This is where some advice on tax reliefs and charity legislation could prove very useful in terms of the club’s future finances – as well as its ability to produce a podium finish.
Local sports clubs can qualify for a variety of tax reliefs by registering as a charity or a community amateur sports club (CASC). The tax advantages can be especially valuable if you have ambitions to develop facilities such as your clubhouse.
Many sports clubs gain tax benefits by registering as a charity or CASC with HM Revenue & Customs (HMRC). Once registered, you can claim tax relief on income, gains and profits from some activities; Gift Aid repayment from donations; and business rates relief.
To register as a CASC, your club must:
- promote participation and facilities for eligible sports – this must be the main purpose of the club, regardless of ability;
- have a formal Constitution (which should be up-to-date);
- be open to the whole community; and
- be organised on an amateur basis.
To qualify as a charity, your sports club must demonstrate it furthers only charitable purposes and provides public benefit in achieving those purposes.
Many rugby, cricket and other sports clubs in Scotland gain additional benefits from registering as a charity, rather than a CASC. The tax benefits for charities are more extensive but there is slightly more regulation imposed.
The additional benefits from being a charity include:
- special VAT treatment in some circumstances;
- gifts of investments and land can be made by both individuals and companies with the benefit of income and corporation tax relief respectively; and
- the ability to raise funds from public grant-making trusts and local government may be easier than for non-charitable bodies.
One major potential advantage of charitable status is in relation to VAT on the construction of buildings. If, for example, your club wishes to develop its clubhouse, it would be worthwhile seeking professional advice on whether you could gain advantageous VAT treatment from being a charity.
If you or your family do play sport locally, it’s well worth looking into whether your club is enjoying the benefits of being a charity or a CASC. Some straightforward legal advice on the registration, compliance, governance or constitution could yield excellent results both on and off the pitch.
Connor Barnes, Solicitor in Charity Law
Published 27 August 2024.
