Volunteer expenses policy

The rule: repay real costs, and nothing that looks like pay

The Charity Commission’s guidance How to manage your charity’s volunteers states the principle in four sentences: “Volunteers aren’t paid for their time but should be paid for any out-of-pocket expenses.” These “could include: travel; postage and telephone costs if working from home; essential equipment, such as protective clothing”. “Volunteers should provide receipts for any expenses they incur.” And: “If a volunteer receives any type of reward or payment other than expenses, they may see this as a salary and they could be classed as an employee or worker. This then gives them some employment rights.”

The same line appears in the law on pay. Under section 44 of the National Minimum Wage Act 1998, a voluntary worker for a charity does not qualify for the minimum wage if they receive “no monetary payments except in respect of expenses” actually incurred, or reasonably estimated as likely to be incurred, in performing their duties, and no benefits in kind other than reasonable subsistence or accommodation. Training is treated as a benefit in kind unless it is “for the sole or main purpose of improving the worker’s ability to perform the work which he has agreed to do”. The government’s page on volunteers’ pay and expenses puts it from the volunteer’s side: you “might be classed as an employee or worker rather than a volunteer if you get any other payment, reward or benefit in kind. This includes any promise of a contract or paid work in the future.”

So a volunteer expenses policy is not paperwork for its own sake. It is the written rule that keeps payments to volunteers on the right side of employment status, tax and benefits, and it is the evidence, claim by claim, that the charity kept to it.

What counts as a volunteer expense

NCVO’s guidance on paying volunteer expenses starts from the volunteer: “Although volunteering is unpaid, it shouldn’t cost a volunteer anything either.” It says you should reimburse “any reasonable expenses incurred while volunteering”, which include, but are not limited to:

• travel, “including to and from the place of volunteering”;
• meals and refreshments;
• care of dependants, including children;
• equipment, such as protective clothing;
• support worker expenses, for example for disabled volunteers or volunteers with chronic health conditions;
• administration costs such as postage, phone calls and stationery.

Some of those are costs an employee would not be repaid. NCVO’s guidance on volunteering, tax and national insurance calls travel to and from the place of volunteering, meals while volunteering and care of dependants “volunteer-specific expenses”, and warns that they “can only be reimbursed tax-free for genuine (ie unpaid) volunteers”. A person who is paid anything beyond expenses loses that treatment.

Set limits where they help, and apply them sensibly. NCVO suggests it “can be helpful to set a limit for expenses such as meals and travel”, to “Be flexible and review this on a case-by-case basis”, and gives examples: food can cost more for people with allergies or dietary requirements, and a volunteer with limited mobility may need a taxi. Check what similar organisations locally pay, and tell people about expenses when you recruit them: NCVO notes that people choose not to volunteer because they are worried about being out of pocket.

The cheapest expense is the one a volunteer never has to claim. NCVO suggests the charity should “Avoid volunteers having to spend their own money”: provide low-cost refreshments at the place of volunteering, buy the resources the activity needs, such as craft materials or gardening tools, and “Pay for pre-arranged travel such as train bookings out of a centralised account”. Where public transport is the realistic option, booking it centrally removes both the claim and the wait for repayment.

Mileage claims: the HMRC rates for 2026–27

Volunteers who drive their own car for the charity are usually repaid per mile. HMRC’s approved mileage rates for the tax year 2026 to 2027 are 55p a mile for cars and vans for the first 10,000 business miles and 25p a mile after that, 24p for motorcycles and 20p for bicycles. From tax year 2011 to 2026 the car and van rate was 45p, so a policy or claim form written before April 2026 may quote the old figure.

HMRC’s volunteer drivers’ guidance (EIM71155) applies those rates to volunteers: “If you drive 5,000 miles and receive more than 55 pence a mile (tax year 2026-2027) you may have tax to pay. If you drive 5,000 miles and receive 55 pence a mile (or less), then you will have no tax to pay.” The limit is per driver, not per charity: “If you drive for 2 or more organisations in the year, the 55 pence rate applies to the first 10,000 miles you have driven for all your organisations added together.” A volunteer paid at the approved rate only needs to record the miles driven and the allowances received, and HMRC adds that a volunteer “can keep records of actual motoring expenses, and claim your actual volunteer costs if you prefer”; a volunteer paid more than the approved amounts works out any profit by HMRC’s method in EIM71160 and declares it.

The approved rates are a ceiling, not a recommendation. NCVO’s guidance on volunteer drivers says they are “upper limits on how much can be reimbursed tax free, not recommended rates for organisations to pay”, that drivers “can be paid 5p per mile per passenger” on top, and that volunteers “should keep clear records of journeys taken as volunteers, with the mileage, time/date and purpose of journey”. It also says drivers using their own vehicles “should tell their insurers”, making clear they receive only out-of-pocket expenses, and that organisations should make sure they have done so.

The payments that cause problems

NCVO is blunt about what a charity cannot do: “You can’t pay volunteers fixed sums, stipends or rewards. This includes vouchers, regular gifts or training that is not necessary for the role.” And: “If you pay volunteers above reasonable expenses it will count as taxable income. It may also create an employment relationship which would give the volunteer employee rights. If you pay a volunteer too much it could also affect their eligibility for state benefits.” Its tax guidance adds that the rules apply “even if you describe payments with terms such as: expense; pocket money; sessional payment; stipend.”

The common traps are therefore:

• Flat-rate allowances. £10 a session “for expenses”, whatever the volunteer actually spent, is a payment, not a reimbursement.
• Rounding up. A mileage rate above the HMRC approved rate, or a standard “travel payment” to volunteers who walk.
• Perks with value. Vouchers, regular gifts, or training that is not needed for the role. NCVO’s guidance on employment status says consideration in a contract “could also include perks or benefits that have a value”, including “training that isn’t necessary to carry out the volunteer’s role”.
• Advances not settled. NCVO says that if expenses are paid in advance, “any money that isn’t spent must be returned or taken off a future expense claim”.
• Home-working costs nobody can measure. NCVO notes it can be difficult to work out what portion of broadband and heating is used for volunteering; “You must be able to prove that what you’re paying is a reimbursement of a volunteering expense.”

Benefits are the reason to get this right for the volunteer’s sake. The government’s guidance on when you can volunteer says people can volunteer and claim benefits if “the only money you get from volunteering is to cover expenses, like travel costs” and they continue to meet the benefit’s conditions. A flat-rate payment can put that at risk for the people a charity most wants to include.

Writing the policy, and the claims record

NCVO says to put the process in writing, “for example in a volunteer expenses policy”, and to include what will be paid with any upper limits, how to claim, a copy of the claim form with “information for volunteer drivers on the allowed HMRC mileage and fuel rate”, how expenses will be paid, and how long payment takes – “It’s good practice to pay expenses within one month.” For a fictional charity, Riverside Befriending Service, the policy might say:

1. What we repay. Bus and train fares at the cheapest reasonable fare; mileage in your own car at 45p a mile, with 5p a mile for each passenger (within HMRC’s approved rates for 2026–27); parking; lunch up to £8 on days you volunteer for four hours or more; childcare or other care costs agreed in advance; phone calls to the people you befriend.
2. What needs agreeing first. Taxis, any single cost over £30, and any regular cost such as care.
3. How to claim. Monthly, on the claim form, with receipts or tickets; mileage with the date, start and end point, purpose and miles of each journey.
4. Who approves. Your volunteer coordinator, or the manager if the coordinator is the claimant.
5. When we pay. By bank transfer within a month of a complete claim; from petty cash, with a receipt, if you do not have a bank account.
6. What we never pay. Fixed sums, allowances or gifts that are not repayment of a cost you have had.
7. If you would rather not claim. You can choose not to, but we will still ask, so that claiming is normal for everyone.

Every figure in that example is illustrative; set your own limits. Whatever they are, keep the claims record. NCVO’s tax guidance says “Adequate records should be kept of the expenses eg receipts, travel tickets or other evidence”, and that while reimbursed out-of-pocket expenses do not go on form P11D, “organisations should be able to show that they were not giving volunteers taxable income”. Each claim form, its receipts and journey log, the name of the person who approved it and the date it was paid are part of the charity’s accounting records; a charity that is not a company must keep those for at least six years from the end of the financial year under section 131 of the Charities Act 2011. Volunteers’ bank details and journey logs are personal data, so store them securely and only for as long as needed.

The approval that was a text message

Most expense decisions are not made on the claim form. They are made in a message at the point of need: “the last bus has gone, ok to get a taxi home?” sent to the coordinator at ten at night, and “yes, of course” in reply. A volunteer asks in the drivers’ group whether the hospital run to the next town counts as one trip or two. The coordinator agrees by text that a volunteer can claim for the childminder on Thursdays. The photo of a receipt is sent in a chat and the paper copy is lost. By the time the claim reaches the finance volunteer, the approval it depends on is on two personal phones.

That matters when anyone asks. An independent examiner testing expenses wants to see that each payment was a reimbursement and was approved under the policy. A volunteer who later claims worker status will point to regular payments and what was said about them. A volunteer whose benefits are questioned needs the charity to confirm that the money was expenses only. NCVO’s test is that the charity “must be able to prove” what it paid was reimbursement, and the proof is often in messages the charity does not hold.

The question for the next trustees’ or finance meeting is concrete: for last quarter’s expense claims, could the charity show each receipt, each journey and each approval given outside the claim form, without asking a volunteer to scroll back through their phone?

Questions people ask

What counts as volunteer expenses?

Volunteer expenses are the reasonable out-of-pocket costs a volunteer has because of their volunteering: NCVO lists travel, including to and from the place of volunteering, meals and refreshments, care of dependants, equipment such as protective clothing, support worker costs and administration costs such as postage and phone calls. The Charity Commission says volunteers should provide receipts for any expenses they claim.

What are the HMRC mileage rates for volunteer expenses?

For the tax year 2026 to 2027, HMRC’s approved mileage rates are 55p a mile for cars and vans for the first 10,000 miles and 25p a mile after that, 24p for motorcycles and 20p for bicycles; before April 2026 the car and van rate was 45p. HMRC’s volunteer drivers’ guidance says a volunteer paid at or below the approved rate has no tax to pay, and the 10,000-mile threshold counts miles driven for all organisations together.

Can volunteers claim travel expenses?

Yes: travel is the most common volunteer expense, and NCVO says it includes travel to and from the place of volunteering as well as travel while volunteering. Its tax guidance says the cost of travel between home and the place of volunteering can be repaid tax-free to genuine, unpaid volunteers, though not to someone who is also paid by the organisation.

Do volunteer drivers need to tell their insurer?

Volunteers who use their own vehicle for volunteering activities, such as driving people to appointments, should tell their insurer and make clear they receive only out-of-pocket expenses, according to NCVO’s guidance on volunteer drivers. NCVO says that simply driving to and from the place of volunteering is not a volunteering activity and does not need to be disclosed, “in the same way that someone driving to work isn’t driving for business or commercial purposes”.

Can a charity pay volunteers a flat rate for expenses?

A charity should not pay volunteers a flat rate that is not linked to costs actually incurred: NCVO says “You can’t pay volunteers fixed sums, stipends or rewards”, and that paying more than reasonable expenses counts as taxable income and may create an employment relationship. Section 44 of the National Minimum Wage Act 1998 does allow payments in respect of expenses “reasonably estimated as likely to be or to have been” incurred, so a charity that uses estimates should take advice and keep the basis of each estimate.

What should be included in a volunteer policy?

A volunteer policy should cover how the organisation recruits volunteers, treats them fairly, makes roles accessible, inducts, trains, supervises and supports them, pays their expenses, keeps them safe, involves them in confidentiality and data protection, and handles problems and complaints, according to NCVO’s guidance on writing a volunteer policy. The expenses policy can sit inside it or alongside it.

Official guidance and your next step

The primary sources are the Charity Commission’s How to manage your charity’s volunteers, HMRC’s travel, mileage and fuel rates and its volunteer drivers’ guidance, and NCVO’s guidance on paying volunteer expenses and volunteers and the law. HMRC sets the mileage rates by tax year, so check the rates page each April.

This guide is a summary for England and Wales, not tax or legal advice. If a volunteer receives anything beyond expenses, or claims to be a worker, take advice.

Then do one thing: open the current volunteer expense claim form and check the mileage rate printed on it. If it still says 45p because that was the HMRC figure, decide whether to keep 45p as your own rate or update it, and minute the decision either way.