It is important for clubs, county boards and councils raise funds from alternative sources other than their membership income. Increased income can help in keeping the club, county board and council afloat or improving facilities.

It is vital when planning a facility development program to review both the clubs, county boards and councils’ current tax position and the future/potential position during and post-fundraising.

Sponsorship is often an important source of money which is discussed in the Sponsorship section but often there are other sources of fund raising such as;

  • Fund raising events such as dinner dances, balls, sports days, lotteries and raffles;
  • Bar income
  • Hiring out facilities

The club, county board and council treasurer needs to look at the corporation tax and the VAT consequences of raising these types of income.

Generally corporation tax will be charged on any profits where the income is from non members and VAT applied to income if the club, county board or council is registered (or should be based on its turnover levels) unless covered by special VAT exemptions.

Profits from non-members and tax obligations

Any public activities attended by non-members such as dinner dances, and festivals which are regularly carried on by clubs, county boards or councils are likely to be treated as a trade by HMRC.

Whilst there may be scope for reducing the taxable income with club costs e.g. with a portion of club overheads, this is not always possible, and Clubs will need to review the relevant tax rules in relation to this.

The club is likely to end up with a taxable profit and Corporation Tax will be chargeable on this; if the events have been held in the past and not reported, clubs should take great care in dealing with HMRC in order to avoid the risk of tax being payable for the past, plus interest and penalties.

The VAT position may be a little easier since there is a special VAT exemption for certain fund raising events such as those mentioned, which are organized by non- profit distributing sports clubs, exclusively for their own benefit.

Lotteries and raffles

Lotteries and raffles sold to the public are subject to Corporation Tax.

There are legal formalities to be dealt with as well. It is possible to structure a lottery outside the club, county board or council so that the surplus is tax free although this requires careful planning.

Fortunately charges to take part in lotteries are exempt from VAT although VAT on the costs associated with the lottery e.g. printing the tickets will not be recoverable.


The proportion of bar income generated from non-members is subject to corporation tax after deducting any applicable costs..

Clearly the bar may be used by members and non-members so clubs and county boards must determine how much of the bar profit is attributable to non-members. This will involve keeping appropriate paperwork.

Bar sales alcohol, soft drinks, food and snacks are all subject to VAT whether sold to members or nonmembers.

Hire of facilities

The hire of facilities is classified as rental income and subject to corporation tax. There is limited relief for the associated costs. If additional services are provided such as a meal and drinks for say, a birthday or anniversary, there is more scope for deducting costs since the activity may be treated as a trade or part of a trade if the letting of facilities and provision of services is regular.

If there is a letting for a period of less than 24 hours VAT will be due on the fee.

If the letting is for more than 24 hours or subject to certain conditions where there is a hiring of a series of 10 or more periods of any length of time, the hire charges are normally exempt.


The above are only a selection of the more common types of fund raising but the principle is clear – when planning a development program do not ignore the possible impact of tax on your income projections. To do otherwise could be costly!

It is also worth noting that if a club, county board or council is undertaking a facility development, a consequence may be that it generates more income that is subject to VAT.

The recovery of VAT on the cost of the development itself may therefore be higher, improving the club, county board or councils’ financial position.