Important Update: Financial gains for grassroots cricket through corporation tax relief

Important Update: Financial gains for grassroots cricket through corporation tax relief

Important Update: Financial gains for grassroots cricket through corporation tax relief.

New tax relief for spending on grassroots sport should be good news for local cricket clubs, as it may help to reduce corporation tax bills.

What is the new tax relief?

A deduction for corporation tax purposes is now available, backdated to 1 April 2017. Relief is available on what HMRC defines as “qualifying expenditure”; payments which are made to develop amateur sport for charitable purposes. This expenditure includes payments to coaches and officials, the costs of matches and competitions and sports facilities costs, but not direct payments to players (expenses for travelling to competitions are acceptable). Organisations can claim relief on up to £2,500 each year (please refer to HMRC’s website for further guidance on what constitutes qualifying expenditure) so at the current corporation tax rate of 19%, the maximum tax saving would be £475.

What does this mean for cricket?

This will have a direct impact on those clubs, county boards and leagues which are paying corporation tax and incur expenditure on recreational cricket. As above, direct payments to players (professional or semi-professional) will not qualify since amateur sport as defined excludes sporting activities where players are paid for playing.

The new regulations also allow companies to support recreational cricket by donating to the club rather than sponsoring, should they prefer, as they will be able to claim tax relief on up to £2,500 each year for any donations made.

Furthermore, a local club seeking to raise funds to build a new pavilion could accept donations from as many companies as it wished to approach. Each company could claim the £2,500 tax relief (so a potential maximum saving of £475 with the 19% corporation tax rate), with no limit to the number of donors for the club, only on the amount of the corporation tax deduction for each donor company.

Next steps for clubs, county boards and leagues

Cricket Clubs, County Cricket Boards and Cricket Leagues that file corporation tax returns and have qualifying expenditure on recreational cricket should review the extent of their grassroots spending from 1 April 2017. This may affect corporation tax returns already filed or about to be filed. Any organisation that is not filing should review their accounts and potentially seek independent taxation advice to ensure that they are correct in not filing corporation tax returns. Please do take independent tax advice if necessary. More information on the new guidance from HMRC can be found here. ECB are unable to provide any direct financial advice so we advise that you contact your accountant or tax adviser who can provide you with accurate and detailed information.

Warm regards
ECB - March 2018

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