HMRC consults on rules for community amateur sports clubs

A technical consultation by HM Revenue & Customs explains how a club would qualify as amateur and in what way it would deserve tax reliefs

Community amateur sports clubs
Community amateur sports clubs

HM Revenue & Customs is consulting on draft regulations that would amend the rules for sports clubs that claim tax breaks by obtaining community amateur sports club status.

CASCs are not charities but enjoy many similar tax benefits, including in some cases the ability to claim Gift Aid.

In March 2013, the government announced that it would amend the qualifying conditions for CASCs to make the regulations simpler for both clubs and HMRC.

A consultation on the proposal carried out last year found that many clubs did not understand or obey the rules.

A technical consultation, which opened last week, sets out much of the detail in the proposed regulations, including draft legislation. It explains issues such as how a club qualifies as amateur, and which level of membership fee allows it to be considered open to the whole community and therefore deserving of reliefs. It also outlines how the government will determine that a club has sport as its main purpose and how membership – and therefore the money members pay to the club – would be classified.

The proposed rules would change the threshold on exemption from corporation tax on trading income from £30,000 to £50,000. The threshold for exemption from corporation tax on income from property would increase from £20,000 to £30,000. A level of £10,000 is proposed for the total limit the club can pay out to members in any one year.

Richard Baldwin, a tax consultant, said the proposed regulations and guidance would bring "marginal improvements to the CASC scheme", with individual clubs likely to be left in the same position or slightly better off.

But he said that a "significant tightening of qualifying conditions" might mean that fewer clubs would join up and there would be a fall in the overall number of tax reliefs given to the sector. He said existing or potential clubs might want to consider applying for charitable status instead of registering as CASCs.

Baldwin said that the majority of clubs for sports with relatively low participation costs should not be adversely affected, but those where it was more expensive might be worried – for example, the roughly half of gliding clubs in the country that have CASC status.

Legislation will be put to parliament before Christmas, after the consultation concludes, and is likely to be passed before the end of the financial year. Guidance on the new rules will be published before 1 April 2015, the consultation documents say.

The consultation will close on 9 November.

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