UK: Sport: Regulatory Issues: (1) Effect on Sport of the Strategy Unit Report on Charities and the Voluntary Sector; (2) Community Amateur Sports Clubs (CASCS)

Last Updated: 10 January 2003

Private Action, Public Benefit – Strategy Unit Report – September 2002

The Government’s Strategy Unit Report on charities and the "not-for-profit" sector was published on 25 September 2002. The recommendations are being consulted upon until 31 December 2002. Once the consultation period is over, the responses will be considered by the Active Community Unit and it will be decided which of the Report’s recommendations are taken forward to implementation.

Separately, the Strategy Unit is carrying out a Sports Policy Review. This is expected to make recommendations in relation to grassroots sport, high-performance sport, major sporting events and the delivery organisations. This Report has yet to be published.

Private action, public benefit – the recommendations that affect sport

Two of the Strategy Unit’s recommendations have a major impact on the regulation of sport. The first is the recognition that the advancement of amateur sport should become a charitable purpose. The second is the recognition of a need for community interest companies.

Advancement of Amateur Sport

The Report recognises that "amateur sport" itself should be recognised as a charitable purpose rather than being a means to providing a different charitable purpose. This goes further than the Charity Commission’s recent pronouncement that "community participation in healthy recreation by the provision of facilities" is charitable. Two other recommendations, relating to the reform of charity law, are significant in this context, namely that:

  • so-called "Small Charities" with an income of less than £10,000 per annum will not have to register with the Charity Commission (although a lighter supervision will apply) but can benefit from the advantages of charitable status;
  • charities will not have to establish trading companies to run social or other trading activities for the purpose of raising funds.

For sports clubs, these proposed changes are welcome. "Amateur sport" (which is to be defined using the definition of sport used for CASCs ie based on recognition of the sport by the Sports Councils) will be charitable in its own right and charitable status affords those clubs which are considering CASC status (see below) an alternative offering better tax breaks.

Many sports governing bodies have related charities that currently deal with the advancement of youth sport. In most cases it should be possible for those existing charities to re-organise themselves so as to include the advancement of "amateur sport", use existing administrative networks to raise and use funds for this area and benefit from the tax reliefs afforded to charities. These sports charities are likely to have incomes in excess of £10,000 per annum and would therefore need to be registered. Many sports charities are constituted as trusts. If their activities increase as a result of the new purpose, consideration will need to be given as to whether they re-organise themselves in the form of the proposed "charitable incorporated organisations" ("CIOs"). CIOs are the proposed limited liability corporate vehicle designed specifically for charities.

One area for thought is whether the term "amateur sport" really encapsulates what is meant to be charitable. Many sports clubs operating at a "grassroots" level may consider the word "amateur" carries with it rather old-fashioned overtones and ideals. It is important that whatever terminology is used it is clearly defined so that those involved with sport know which elements of the sports industry are charitable and which are not.

Community Interest Companies

The sports governing bodies have typically started life as unincorporated associations and changed legal status (to gain the protection afforded by limited liability) to companies limited by guarantee (or shares) and, occasionally, to industrial and provident societies.

Sports governing bodies are not identified specifically in the Strategy Unit’s Report as "social enterprises" but it is clear that they are not intended to make a profit other than for the sport into which any profits are ploughed back. The proposed Community Interest Company may be the natural evolution for sports bodies since the assets would be protected for the sport, which would give the Sports Councils and other funders reassurance that money given to the sport would be ring-fenced for its benefit. The proposal that such a company would also be able to grant preference shares to funders could lead to imaginative ways for funds to be raised for sport.

Community amateur sports clubs – a damp squib?

Some time before the Strategy Unit disclosed its proposals for wide-reaching change in the voluntary sector, many sports clubs campaigned for "parity with charity" in terms of tax relief. The Finance Act 2002 defines CASCs and sets out the conditions for their favourable tax treatment.

As CASCs must operate for the benefit of the community, many sports clubs will need to change their ethos and constitution from being established for their members to being established for the community. Indeed, CASC status will not be appropriate for every sports club and only sports recognised by UK Sport can become CASCs.

The table headed "clubs" on the back of this paper sets out in general terms an analysis of the different tax treatment of a sports club, a CASC and a charity for different types of revenue and activities so that you can compare the advantages of each.

However, if a sports club is currently fund-raising for a new clubhouse or ground, then CASC status could be advantageous as there are various tax incentives offered to supporters of CASCs (see the table headed "supporters" overleaf). Essentially, the club can benefit from the basic rate tax reclaim (currently 28p to every £1 given) and, where the gift is not cash, the supporter will not have to pay capital gains tax on its disposal.

Before jumping on the band-wagon to change status, sports clubs should analyse whether the costs of changing status (which could involve constitutional changes to fit within the definition of a CASC) are worth it. The Sports Unit at the Inland Revenue has indicated that becoming a CASC will not prejudice a club’s ability to claim any reliefs to which it is currently entitled, and therefore in deciding to become a CASC, a club will need to decide whether it will get any additional benefits. Many clubs currently gain from mutual trading status and, even if they do not, if their profit is no more than £10,000 it will be taxed at the 0% corporation tax start rate anyway. If a club falls within these categories, it will only be worth becoming a CASC if it is fund-raising significantly and, even then, as the CASC reliefs are not as favourable as those available to charities it may be worth considering charitable status instead.


Although sports clubs have welcomed the introduction of CASC status, the proposals of the Strategy Unit are of even more interest, as the tax reliefs for CASCs are more limited than for charities.

Once the consultation has been completed, the responsibility for proposals being taken forward will be divided between different government departments (although the bulk of the responsibility will remain with the Home Office). The speed with which legislation is enacted to put the recommendations in place will depend on the relevant department’s legislative agenda. However, early indications are that a draft bill might be put to Parliament as early as Autumn 2003 and, therefore, that these recommendations could become law within the next two to three years.

As a sports club would have to change its constitution to become a CASC or a charity, there is a strong argument that for most clubs it is worth waiting for amateur sport to be charitable in its own right to obtain in one step the extra benefits that come with that status (and saving themselves the constitutional changes to obtain CASC or charitable status in the meantime).

Private action, public benefit – consultation

The Report is currently being consulted upon. We urge sports clubs to respond if only to welcome the proposed changes and to make the Government aware of the strength of support for the proposals. The Report can be obtained from Responses need to be sent to by 31 December 2002.



Sports Club



Corporation Tax








Income from land


Up to £10,000 gross income exempt but entire profits taxable if turnover threshold breached

All exempt

Trading income (Sch DI)

Taxable, subject to mutuality doctrine (which usually means trading with members eg subscriptions, bar takings from members are not counted as taxable income) and other concessions such as donated goods

Up to £15,000 gross income exempt but entire profits taxable if turnover threshold breached

Exempt if primary purpose trading or by beneficiaries, or "de minimis" or an exempt fund-raising event"

Donations/Bank Interest/Other Sch DIII

Taxable but donations of money by individuals are not treated as taxable, provided genuine

Interest and gift aid compliant donations exempt

All exempt

Other income - such as from property development




UK-source dividends (Sch F)




Chargeable Gains




Non-domestic Rates

At present, discretionary up to 100% but Local Government Bill may introduce mandatory relief at 50% for clubs with a rateable value of less than £3,000 reducing to no relief for clubs with a rateable value of more than £8,000

Mandatory 80%, Discretionary 20%

Stamp Duty and Stamp Duty Reserve Tax




Conditions for Reliefs to Apply


Reliefs rely upon application of funds for qualifying purposes

Reliefs rely upon application of funds for charitable purposes

Supporters (individuals and companies)

Relief Against

Amateur Sports Club

(Community Amateur Sports Club


Income Tax

No relief but Sponsorship by a company may be deductible as a business expense

Gift aid by individuals only

Gift aid by individuals or companies


Traders allowed relief for gifts of stock

Payroll Giving



Gifts of shares and land



Traders allowed relief for gifts of stock

Chargeable Gains Tax

No specific relief

Gifts at no gain/no loss

Gifts at no gain/no loss

Inheritance Tax

Generally chargeable

Relief as for a gift to charity

Relieved subject to anti-avoidance

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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