Volunteer Expenses: HMRC Guidelines Breakdown

Volunteers are the backbone of many organisations, yet volunteer participation in the UK has declined in recent years.

In 2021/22, only 16% of people volunteered at least once a month, down from 23% in 2019/20 - a decline partly linked to challenges like financial barriers and lack of support. 

Managing volunteer expenses effectively is one way to remove these barriers and encourage participation.

Clear policies and processes not only make it easier for volunteers to claim legitimate reimbursements but also help organisations stay compliant with HMRC guidelines. 

This guide breaks down everything you need to know about volunteer expenses HMRC rules and offers practical tips to simplify expense management so your volunteers feel supported and valued. 

What are Volunteer Expenses? 

Volunteer expenses refer to out-of-pocket costs that individuals incur while offering their time and skills without pay. 

Examples of Volunteer Expenses 

Organisations typically cover reasonable expenses necessary for volunteers to perform their roles effectively.

According to HMRC, common examples include: 

• Travel costs: Public transport fares, mileage, or parking fees incurred travelling to and from the volunteering location. 

• Meals and refreshments: If volunteering spans mealtimes, reasonable food or drink expenses may be reimbursed. 

• Equipment or uniforms: Costs for specific tools, safety gear, or uniforms required for the role. 

• Training and certification: Fees for necessary courses or certifications related to the volunteering activity. 

• Childcare or dependent care: Some organisations may reimburse costs for childcare or dependent care while volunteers are working. 

Are Volunteer Expenses Taxable? 

In the UK, reimbursed volunteer expenses are generally not considered taxable income, provided that: 

1. They reflect actual costs incurred by the volunteer, without any profit element. 

2. Claims are supported by expense receipts or appropriate documentation. 

According to HMRC, volunteers should not receive payments that amount to more than their actual expenses, as this could be classified as income and thus be taxable. 

HMRC Rules for Volunteer Reimbursements 

To qualify as reimbursements under HMRC guidelines, these expenses must meet specific conditions: 

1. Avoid paying flat rates 

Only reimburse actual costs supported by receipts (or e-receipts) or records.

Payments exceeding the actual cost could be seen as taxable income. 

2. Maintain clear records 

Keep receipts, travel logs, and expense forms for all reimbursements. 

3. Exclude personal costs 

Costs unrelated to the volunteer role (e.g., personal meals or leisure activities) are not reimbursable. 

4. Use HMRC mileage rates 

For volunteers using their personal vehicles, reimbursements should align with HMRC’s approved mileage rates, which are currently: 

• 45p per mile for cars and vans (for the first 10,000 miles in a tax year). 

• 25p per mile beyond 10,000 miles. 

• 24p per mile for motorcycles.

• 20p per mile for bicycles. 

• 5p per mile per passenger for carrying fellow volunteers in a vehicle on volunteer journeys. 

Are Volunteer Reimbursements Taxable? 

Generally, genuine volunteer reimbursements are not taxable, as long as they cover only the costs incurred.  

However, if payments are deemed excessive or unrelated to actual expenses, HMRC may classify them as income, subjecting them to tax and National Insurance. 

How to Record and Manage Volunteer Expenses in the UK 

Keeping track of volunteer expenses doesn’t have to be complicated.  

Following a few simple steps and using the right tools can make the process easy for your organisation and your volunteers.  

Here’s how to confidently manage volunteer expenses HMRC requirements: 

1. Create a Clear, Easy-to-Understand Expense Policy 

• Start with a straightforward volunteer expenses policy that explains what expenses are covered, such as travel, meals, or equipment needed for volunteering. 

• Include details like reimbursement limits. 

• Share the policy with all volunteers so they know exactly how to claim expenses. 

We’ll expand in detail on how to create an effective volunteer expense policy in the next section of this article. 

2. Keep Proper Records 

• Ask volunteers to submit receipts for their expenses to maintain transparency. 

• Use simple mileage logs to document travel-related claims. 

• Maintain a record of all submissions for easy tracking and to meet HMRC compliance requirements. 

3. Simplify the Process with Templates and Tools 

• Use easy-to-fill expense forms or policy templates to guide volunteers through the claims process. 

• Consider digital expense management software like ExpenseIn, which lets volunteers submit expenses quickly and hassle-free. 

How ExpenseIn Can Help Manage Volunteer Expenses

ExpenseIn’s ad hoc module is an expense management solution designed specifically to make managing non-employee expenses fast, simple, and stress-free.  

Here’s how it works: 

• Quick submissions: Volunteers can submit expense claims in just a few clicks, whether they’re at home or on the go. 

• Real-time tracking: Get instant updates on claims and approvals, so there’s no more chasing paperwork. 

• Automated policy compliance: ExpenseIn ensures every claim matches your policy and HMRC rules, helping you avoid mistakes. 

• Custom branding: Make the platform feel like your own by adding your organisation’s logo and colours. 

Creating Volunteer-Friendly Policies for Managing Expenses 

A well-crafted travel and expense policy not only ensures compliance with volunteer expenses HMRC regulations but also shows your volunteers that their time and contributions are valued.  

By making the process simple and transparent, you can encourage more people to get involved without worrying about financial barriers. 

Here's how to create a policy that’s clear, simple, and volunteer-friendly: 

1. Keep It Simple and Clear 

• Use plain, conversational language. Avoid complicated legal or financial terms that could confuse volunteers. 

• Break the policy into easy-to-read sections with bullet points or headings for quick reference. 

2. Be Transparent About What’s Covered 

• Clearly list all reimbursable expenses, like travel (mileage or public transport), meals, and childcare. 

• Include details about limits - for example, HMRC-approved mileage rates (e.g., 45p per mile for cars up to 10,000 miles). 

3. Make the Process Easy for Volunteers 

• Provide simple steps for submitting claims, including any forms or documents needed. 

• Explain how receipts or mileage logs should be submitted and by when. 

4. Be Inclusive 

• Ensure the policy addresses potential barriers, like childcare or dependent care costs, so all volunteers can participate. 

• Emphasise that reimbursed expenses are non-taxable when they reflect actual costs and proper documentation is provided. 

5. Keep It Up-to-Date 

• Review your policy annually to ensure it complies with the latest HMRC guidelines. 

• Ask volunteers for feedback to improve clarity and effectiveness. 

Common Misconceptions About Volunteer Expenses 

When it comes to managing volunteer expenses, there’s a lot of confusion about what’s allowed under HMRC guidelines.

Misunderstandings can lead to errors, unnecessary tax issues, or even volunteers feeling unsure about claiming legitimate reimbursements.  

Let’s clear up some of the most common misconceptions about volunteer expenses HMRC rules. 

1. Volunteers Can Be Paid a Flat-Rate Allowance 

Reality: While it might seem simpler to offer a flat-rate allowance for travel or meals, HMRC guidelines state that reimbursements must reflect the actual costs incurred by the volunteer. 

For example: 

• Mileage must be reimbursed based on HMRC's Approved Mileage Allowance Payments (AMAP).

• Providing a blanket payment exceeding actual expenses could classify the payment as taxable income. 

Pro Tip: Always require receipts or mileage logs to substantiate claims. 

2. Volunteers Don’t Need to Keep Records 

Reality: Proper documentation is essential. HMRC requires organisations to maintain accurate records of all reimbursed expenses to avoid disputes or penalties.  

Volunteers should: 

• Keep receipts for travel, meals, or equipment purchases. 

• Use mileage logs to record travel costs. 

Pro Tip: Business expense tracker apps like ExpenseIn make it easy for volunteers to log and submit expenses while keeping your organisation compliant. 

3. Meals or Refreshments are Always Reimbursable 

Reality: Volunteers can be reimbursed for meals or refreshments consumed during their duties as long as the expenses are reasonable and necessary.  

For example: 

• Lunch during a long volunteer shift is acceptable. 

• A fine dining experience might not meet HMRC’s definition of a reasonable expense. 

Pro Tip: Clearly outline what counts as reimbursable in your volunteer expense policy. 

4. Travel Between Home and the Volunteering Site Isn’t Reimbursable 

Reality: Unlike employees, volunteers can claim travel costs to and from their volunteering location as long as it’s necessary for their role.  

This includes public transport fares, parking fees, and mileage if they use their own vehicle. 

Pro Tip: Refer to HMRC’s guidelines on travel expenses for approved rates. 

5. Overpaying a Volunteer Won’t Have Tax Implications 

Reality: Reimbursing volunteers more than their actual expenses, even unintentionally, could result in HMRC classifying the extra amount as income.  

This means: 

• The volunteer could face tax liabilities. 

• Your organisation may inadvertently classify the volunteer as an employee, leading to further legal and tax complications. 

Pro Tip: Always ensure reimbursements are limited to actual costs with proper supporting documentation. 

Supporting Your Volunteers While Staying HMRC Compliant 

Managing volunteer expenses HMRC guidelines can seem overwhelming, but with the right approach, it’s an opportunity to support your volunteers and streamline your processes.  

Volunteers dedicate their time and energy to your cause, and reimbursing their expenses fairly and efficiently shows that you value their contributions. 

By creating clear policies, maintaining proper records, and using tools like ExpenseIn, your organisation can ensure compliance, remove barriers for volunteers, and foster a positive volunteering experience. 

If you’re ready to simplify expense management for you and your volunteers, book a free demo with ExpenseIn today to learn how we can help.