Tax relief for contributions to grassroots sport

As parties at Number 10 carried on seemingly unabated, participation in grassroots sports was prevented due to Covid restrictions obeyed by the general public.

Non-professionals and millions of children in particular will have found it difficult to train. This is likely to have a longer term impact on mental health and obesity levels, leaving an NHS that is already at breaking point to bear the brunt. 

The recent State of Play Report highlights a Football Association claim, that in England alone, the economic value of grassroots football for adults is £10.8 billion! £8.7billion relates to social wellbeing benefits and £43m saved via reduced impact on the NHS. This is without factoring in children’s football and all other grassroots sports. In the report, it is believed that an estimated 4,000 grassroots football clubs will struggle to survive the next 12 months.

As Sport England are now funding a £16.5m Return to Play Fund, it is hoped with increased funding and donations that grassroots sport will survive its current perilous state, and this is an ideal time to remind the business community of a corporate tax relief to encourage closer links to local sports clubs.

What is the relief?

The two reliefs available that allow deductions from profits subject to corporation tax, are as follows:

  1. All contributions made to grassroots sports through recognised national sport governing bodies; and/or
  2. Annual deductions of up to £2,500 for company donations made directly for grassroots sports through a club

Eligible donations can be used for (though not limited to) grants, payments to hire facilities, costs of training coaches and officials, reasonable out of pocket expenses paid to participants for travel, equipment, facilities and team kit, marketing, communications and information technology, and paying coaches or officials for their services may also be covered.

How does it affect the sector?

The tax relief was introduced in 2017 to provide a welcome boost to grassroots sport to incentivise additional investment. The main aim is to encourage sports participation at a local level and reduce administrative burdens for some organisations which currently make contributions to grassroots sports.

Grassroots sports are encouraged to maximise the relief, especially after the pandemic. There is no limit on the number of contributions a club can receive so there is nothing to stop a club seeking to attract multiple donations of £2,500.

Corporate donors are encouraged to form links with local clubs to maximise the corporation tax relief, whilst benefitting local grassroots sports and the wider community in terms of positive impacts on social connection, mental and physical health and reducing the burden on the NHS.

There are certain restrictions on the relief and the Dafferns team would be delighted to discuss the operation of the relief in more detail should you wish.