HMRC undertook a review of the CASC scheme last year, culminating in a Summary of Responses, which identified the need for a number of changes. This can be found here.
By way of a recap, in recognition of the important role played by amateur sports clubs in local communities, Parliament introduced the CASC scheme in 2002. CASC status allows clubs to access some (e.g. non-domestic business rates relief, personal Gift Aid), but not all, of the benefits of charitable status without many of the accompanying administrative responsibilities.
CASCs have to register with HMRC which exercises a ‘light touch regulation’, but clubs wishing to achieve and maintain this status have to adhere strictly to specified criteria.
In summary, the new changes to the existing CASC scheme are:
- Costs of participation: Clubs will be able to charge participation fees (which includes equipment and associated costs of playing a sport) of up to £520 a year. Where a club charges over £520, provision must be made for people on lower incomes in order to be considered open to the community.
- Membership fees: Clubs can charge an absolute maximum annual membership fee (not including other participation costs) of £1,612 or £31 per week and be a CASC but would have to offer a range of concessionary offers to people who wish to participate but can’t afford membership at this level. Examples of these offers include:
- Open days, taster sessions and lower income packages;
- Free coaching and equipment loan;
- Discounted and concessionary membership fees, possibly including means tested membership;
- Establish a charitable fund/bursaries to young people who may not be able to afford membership, coaching and or equipment; and
- Advertise all the opportunities and packages available to play at the club.
- Paying players: Clubs will be able to financially support players subject to a limit of £10,000 a year per club.
- Travel and subsistence: Reasonable travel and subsistence payments will now be allowed to away matches. In order to qualify for the subsistence payments (in addition to away travel expenses), club members will have to be travelling for more than 4 hours in a day.
- Tours: Clubs can also pay expenses for tours provided sport or training is taking place on at least 75% of the days.
- Participating and social members: The informal 50% participating players rule will be formalised so that a club will not qualify for the CASC scheme unless it has at least 50% participating (i.e. at least 12 times a year) as opposed to ‘social’ members include volunteers, officials, management committee etc. Guests will be considers as non-members.
- Social income: There will no limit on the amount of income clubs may generate from members but there will be an income limit of £100,000 they can generate from trading with non-members. Clubs generating higher levels of income will need to consider setting up a trading subsidiary (see below).
- Corporate Gift Aid: Government will extend, for the first time, Corporate Gift Aid to CASCs. This represents a new source of revenue support for these clubs and will enable larger clubs to set up a trading subsidiary, which can pass its profits tax-free to the parent club.
- Tax exemptions: The threshold for the exemption from tax for trading income will be increased from £30,000 to £50,000 and for rental income will be increased from £20,000 to £30,000.
- Tax charge on de-registration: The tax charge on de-registration will remain if the qualifying conditions for CASC are broken.
The reliefs already offered to CASCs include exemption from 80% of business rates, which remains; the right to claim Gift Aid on individual donations; and corporation tax exemptions of £30,000 for trading and £20,000 for rental income, both of which are increased (see above).
The new rules represent a significant relaxing of the financial constraints imposed upon CASCs. Helpfully several changes went beyond the proposals set out in the public consultation. However, CASCs and clubs considering CASC status will need to consider the impact of the cap on membership fees and participation costs.
HMRC is due to publish draft regulations on certain elements of the new rules (e.g. reasonable expenses) shortly. We will update clubs in due course.
If you wish to discuss how the changes will impact upon Clubs, please contact John Devine on 0191 211 7905.