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World Sports Advocate
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Volume: 15 Issue: 8
(August 2017)

uk reintroduce tax incentives spending grassroots sport national governing bodies respond new code sports governance proposal introduce tax incentives

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UK to reintroduce tax incentives for spending on grassroots sport and national governing bodies respond to new Code for Sports Governance

A proposal to introduce tax incentives in the UK for spending on grassroots sport by allowing companies to make tax deductions for their spending will be reintroduced, the UK’s HM Treasury announced on 14 July 2017. The UK Government has confirmed that the proposal will be reintroduced in the second Finance Bill in September, taking effect from April 2017 as originally intended. The Government put forward the proposal in its Finance Bill 2017 published on 20 March 2017, but proposals were dropped due to the UK’s General Election in June.

Richard Baldwin, Sports Tax Specialist, explains that “As a result of this law going through, clubs not registered as community amateur sports clubs or charities, will for the first time be able to get statutory corporation tax relief for grassroots spending. They will also be able to seek an unlimited number of corporate patrons for their local projects with each patron getting a tax deduction for their donation up to £2,500 pa.”

The new tax incentives being adopted follow strong lobbying of the Government by sport and will help sport by giving corporation tax relief for qualifying expenditure on grassroots, amateur sport by, inter alia, national governing bodies of sport for all of their expenditure; companies for contributions made to national governing bodies for grassroots expenditure; county and regional sport associations and clubs up to an annual limit of £2,500; and companies making contributions to county and regional sport associations and clubs up to an annual limit of £2,500.

The Government believes that the 19% corporation tax saving now available will incentivise contributions to grassroots sport at all levels and in doing so facilitate participation. “The Government is to be congratulated on this new tax measure which will help not only national governing bodies but also sport at the lower levels,” adds Baldwin.

Meanwhile, UK Sports Minister Tracey Crouch praised the way national governing bodies have responded to the new Code for Sports Governance on 27 July 2017, adopted by Sport England and UK Sport, which has set out new transparency, accountability and financial integrity requirements that sports bodies must comply with in order to receive Government and National Lottery funding. 

Sport England announced the decision to freeze funding for Table Tennis England on 11 July 2017, following a members vote against making changes that would have enabled the organisation to adhere to the requirements of the Code for Sports Governance. Sport England stated in its press release on the matter that it is disappointed that members voted against making changes but that “Our policy is clear. Organisations that don’t meet the Code for Sports Governance will not be eligible to receive public investment. Therefore no further investment can be made in Table Tennis England until changes are made.”

Despite the freezing of funding for Table Tennis England, Sport England has highlighted the progress made by 50 sports bodies including The FA and British Cycling, which have agreed plans on how they will become compliant. According to Sport England, The FA’s board, council and shareholders have agreed to reduce the board in size from 12 to 10 members, introducing term limits of three, three-year terms for both the board and The FA Council and ensuring that the inclusive and diverse nature of English football is better reflected.

British Cycling’s National Council has also agreed to make the necessary changes to enable it to become compliant with the Code for Sports Governance. The reforms to be adopted include an increase in the number of openly recruited independent board members, an independent chair, and a limit for directors of three, three-year terms, with six of the eight current elected members of the board who have exceeded that maximum due to stand down in autumn.

“I am really pleased with how governing bodies have responded to the introduction of the code. I appreciate for many sports this is not an easy task, due to the complexities of current governance structures, but virtually all of them have stepped up, understand the importance of this work and have changes in the pipeline that will collectively strengthen sport in this country,” said Crouch, who put forward her plan for the new Code in the Government’s sport strategy ‘Sporting Future in December 2015 with the aim of making the UK a world leader in regards to governance and transparency within sport. 

If sports bodies within the UK do not adhere to the new code by 31 October 2017 and cannot demonstrate full commitment to becoming compliant with its requirements they will not be eligible to receive public funding.

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