Pay a trustee to be a trustee

When you become a trustee, you volunteer your services and usually won’t receive payment for your work.

Generally, charities cannot pay their trustees for simply being a trustee. Some charities do pay their trustees – they can only do so because it’s allowed by their governing document, by the Charity Commission or by the courts.

Trustee expenses

The law entitles charity trustees to claim legitimate expenses while engaged on trustee business. No separate authority is needed in the charity’s governing document or from the Commission.

Expenses are for out-of-pocket payments trustees have to make in order to carry out their duties, for example:

• travel to and from trustee meetings
• overnight accommodation
• postage, telephone calls and broadband time for charity work
• childcare or care of other dependants while attending meetings

Your charity should have a written agreement setting out what is classed as an expense, plus how to claim and approve expenses.

Some types of payment are often confused with expenses, when they are actually trustee benefits which HMRC will consider can be taxed as income. They can only properly be paid out of charity funds if there is suitable authority for doing so.

The following are all examples of payments which are not expenses, and which the Commission might need to authorise:

• compensation for loss of earnings whilst carrying out trustee business
• allowances: for example, a personal clothing allowance
• honoraria (small or token sums not intended to reflect the true value of the service provided)
• payment for use of a trustee’s property (or part of it) for storage and use of charity equipment

Pay a trustee to provide goods or services to the charity

Trustees could be paid for:

• work such as plumbing or painting and any associated materials such as paint or plumbing parts
• providing specialist services, such as estate agency or computer consultancy
• providing premises or facilities for occasional use, for example as a meeting room
• administration or secretarial work
• supplying stationery to the charity

Pay someone who is connected to the charity

If someone is connected to a trustee, they are known as a ‘connected person’. For example:

• a spouse or partner
• siblings
• a brother- or sister-in-law
• parents
• business partner
• businesses connected to trustees
• If a connected person is to be paid or employed by the charity, the trustee or trustees they are connected to must not be involved in any part of the process.

Buy a leaving gift for a trustee

You may decide that it is appropriate to use the charity’s money to buy a small gift as a leaving or retiring present for a trustee.

Small gifts usually do not need the Commission’s authority, provided that:

• the value of the gift is minimal
• the trustees agree it’s in the charity’s best interest

When to get Commission consent

If your governing document doesn’t allow you to pay trustees, you may need to get the Commission’s consent before you:

• employ a trustee, or a connected person
• pay a trustee for serving as a trustee
• pay a trustee’s expenses or replace lost income
• pay a trustee or connected person for providing goods or services to the charity

More detailed guidance can be found here