16 Nov Honorarium Payments to Committee ARE Taxable
Yet another sports clubs was officially informed this week that honorarium payments to committee members ARE taxable payments and therefore subject to tax and national insurance.
The club have been paying an annual £1,500 payment to the Secretary and Treasurer for the past three years and were informed of the taxable nature of the payments by letter last week, following a tax investigation by HMRC (tax authorities).
What is an Honorarium?
HMRC define an honorarium as ‘a payment to an employee in recognition of unpaid services they provide as an office-holder in a separate organisation – for example, as a sports club secretary’. They state on their website that ‘such a payment counts as earnings and should be added to any other earnings. PAYE tax and Class 1 NICs should be deducted using the usual payroll procedures’.
It is therefore clear that the club paying the money is responsible for deducting any tax and NI due (the level of which will be dependent on the other income received by the recipient in other roles/employment) and, as such, it is the club who will be penalised if the payment is not correctly declared to the tax authorities.
Non-declaration of such payments may also result in fines and payment of interest for the club so it is recommended that clubs ensure such payments are correctly processed. The club may also choose to increase the payment made to ensure that the volunteer receives the full amount that the club believes them to be entitled to, i.e. the club pays any tax and NI due on the payment.
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