Grassroots sports clubs may become exempt from corporation tax

The government is gearing up to launch a consultation that will determine whether corporation tax on grants and donations will be scrapped for grassroots sports clubs. 

Stakeholders and members of the public will be able to express their views about whether grassroots clubs should be able to keep 100 per cent of grants made by national governing bodies and funding organisation Sport England, or donations provided by private companies, rather than continuing to pay the standard 20 per cent tax. 

The consultation paper will be published this week and the government will begin to take submissions. 

Originally revealed in last year’s autumn statement by chancellor George Osborne, the consultation was again flagged during last week’s presentation of the Budget. 

Passage 2.89 of the Budget states: “Consultation on how to expand the support that can be given to grassroots sports through the corporation tax system – the government will launch a consultation on how to expand support that can be given to grassroots sport through the corporation tax system.” 

If the consultation period generates a positive response, it will represent a significant boost for grassroots sports clubs up and down the country, which rely on grants and donations to improve facilities, buy equipment, or in many cases, just keep running. 

The consultation was part of a number of measures announced by the government in recent months to boost the physical activity of the population. The same Budget announced that government funding for PE and sport in primary schools would be doubled to £320m (US$451.3m, €407.3m) as a result of a levy being applied to companies producing sugary drinks. 

In addition, 25 per cent of secondary schools across the country will be able to bid from an annual pot of £285m (US$402m, €362.8m) to opt into longer days and offer a wider range of activities to pupils, including sporting activities. 

At the centre of this, however, is the government’s recently published sport strategy – Sporting Future – which laid out its vision for sport and physical activity over the coming decade, confirming that Sport England’s £1.4bn (US$2bn, €1.8bn) funding would remain for the length of the parliament. 

Abolishing corporation tax for grassroots sports clubs would effectively increase the pot, although clubs bidding for public money have to demonstrate a number of measures, including physical and mental health benefits, social progress and economic viability. 

If the consultation does not generate the desired response for the sector, grassroots clubs will continue to pay corporation tax, which is likely to be decreased to 17 per cent – another proposal made by the chancellor last week.

First published www.sportsmanagement.co.uk, 21 March 2016, written by By Matthew Campelli