Do Volunteers Need to Be Paid or Reimbursed for Expenses

Introduction

Volunteers give their time freely to support a cause, but they often incur personal costs along the way. From travel and meals to phone calls and stationery, small expenses can add up. It’s important for charities to handle these costs properly to stay fair, compliant, and transparent.

While volunteers do not receive wages, they can and should be reimbursed for out-of-pocket expenses that arise directly from their volunteer work. Paying volunteers incorrectly, however, can create tax and employment complications.

Are volunteers entitled to pay

No, volunteers are not entitled to wages or salaries. By definition, volunteering is unpaid work carried out for the public good. If a volunteer receives pay or benefits that resemble a salary, they could be classed as an employee or worker under employment law.

This reclassification could require the charity to pay National Minimum Wage, provide payslips, and follow employment legislation. To prevent this, any money given to volunteers must be strictly limited to genuine expense reimbursements.

What counts as reimbursable expenses

Charities can reimburse volunteers for reasonable and legitimate out-of-pocket expenses that they have incurred while performing their duties. Common examples include:

Travel expenses: Public transport fares, fuel costs, parking, or mileage (usually at HMRC’s approved rate).

Meals: Food or refreshments purchased while volunteering for extended periods.

Phone and communication costs: Mobile calls, data use, or postage for charity-related tasks.

Uniform or protective clothing: If required for the volunteer role.

Training costs: Fees or materials needed for essential volunteer training.

Expenses should always be based on actual costs and supported by receipts or mileage logs. Charities can reimburse these either by paying the exact amount spent or by using a clear, reasonable allowance policy that mirrors typical costs.

What cannot be paid to volunteers

Volunteers must not receive any form of payment that could be seen as a financial reward for their time. This includes:

Fixed daily or weekly allowances that are not linked to actual expenses.

Vouchers, discounts, or free goods that have monetary value.

Benefits that are not essential to performing the volunteer role.

Even small payments can trigger employment or tax liabilities if they appear to compensate volunteers rather than reimburse costs. For instance, offering a “thank you” payment of £20 per shift could be interpreted as pay rather than reimbursement.

The difference between reimbursement and payment

Reimbursement covers expenses that volunteers have actually incurred while carrying out their duties. Payment, on the other hand, implies compensation for time or service.

For example:

Paying a volunteer £10 for petrol after submitting a receipt is reimbursement.

Paying a volunteer £10 every day regardless of travel is payment.

The first is acceptable; the second risks creating an employment relationship.

Should volunteers be reimbursed automatically

Charities are not legally required to reimburse volunteers, but doing so is best practice. Failing to reimburse genuine expenses could make volunteering inaccessible for people on low incomes or those who live far from the charity’s base.

Reimbursing costs fairly ensures inclusivity and encourages a wider range of people to volunteer. It also demonstrates respect for their contribution and promotes good volunteer management.

How to manage volunteer expenses correctly

Have a clear expenses policy: Outline what can be claimed, how to claim it, and what evidence is required.

Keep records: Retain receipts, claim forms, and approvals for each reimbursement.

Pay back exact costs: Only reimburse what has been spent, not an estimated amount.

Train staff and trustees: Make sure everyone understands the rules about volunteer payments.

Communicate openly: Explain the reimbursement process to volunteers when they join.

A transparent policy reduces misunderstandings and ensures consistent treatment for all volunteers.

Can volunteers be given gifts or rewards

It’s fine to thank volunteers with small tokens of appreciation, such as a card, a social event, or a certificate. However, these should have minimal or no cash value. Offering significant gifts or vouchers could unintentionally create a tax liability or be viewed as payment.

Some charities host volunteer recognition events or offer free refreshments during shifts. These gestures are acceptable as long as they remain modest and are not tied to performance or hours worked.

What about training and benefits in kind

Charities can provide free training if it’s relevant to the volunteer role and helps them perform their duties safely or effectively. This is considered part of the volunteering experience rather than a financial benefit.

However, offering unrelated perks such as gym memberships or shopping discounts could imply employment benefits and should be avoided. Always check that any benefit provided directly supports the volunteer’s work.

The risk of creating an employment relationship

If a volunteer is paid or treated like an employee, HMRC or an employment tribunal could decide they are a worker in law. This could mean the charity must:

Pay the National Minimum Wage or National Living Wage.

Deduct PAYE tax and National Insurance.

Provide paid holidays and statutory rights.

To stay compliant, make sure volunteers have no binding contract and no expectation of payment. They should be free to stop volunteering at any time without notice or penalty.

How long to keep expense records

Charities should keep expense claim forms and supporting documents for at least six years in line with HMRC record-keeping requirements. These records provide proof of compliance if HMRC reviews your charity’s accounts or tax status.

Common mistakes to avoid

Paying fixed allowances instead of reimbursing actual costs.

Failing to keep receipts or documentation for claims.

Providing excessive benefits or gifts that could be seen as payment.

Treating long-term or regular volunteers like paid staff.

Not communicating reimbursement policies clearly.

Avoiding these mistakes protects both the charity and its volunteers from tax or employment complications.

Conclusion

Volunteers do not need to be paid, but they should be reimbursed for genuine expenses incurred while helping your charity. Reimbursement ensures fairness, supports inclusion, and helps maintain compliance with HMRC and employment law.

By having a clear expenses policy, keeping accurate records, and avoiding payments that could be mistaken for wages, your charity can reward volunteers appropriately while staying fully compliant. Volunteers are at the heart of most charitable work, and managing their expenses correctly shows respect for the time and effort they give.