Trustee Expenses: A bitesize guide

One of the basic principles of trusteeship is that a trustee must not place themselves in a position where there could be conflict between their personal interests, and the duty of care they owe to the charity.

Payments may be made to trustees in certain circumstances, but there are strict guidelines around each type of payment that trustees must be aware of. This blog focuses on the most common type of payment to trustees – expenses.

The Charity Commission has made it clear that they do not expect trustees to be “out of pocket” through the discharge of their duties, and therefore that the claiming of expenses is reasonable, if dealt with correctly. 

Expenses policy

To ensure that expenses are dealt with correctly, it is important for a charity to have an expenses policy in place.

The expenses policy should:

• Set out what can and cannot be claimed as an expense;
• Detail how the expense should be reclaimed, including rules for supporting documentation to be provided;
• Be in writing;
• Be fully understood by all trustees; and
• Be reviewed regularly.

Assessing what can and cannot be claimed

It’s important to recognise what expenses can and cannot be reclaimed. The criteria might include:

• Whether amounts are excessive or unreasonable;
• Whether the expense falls within or outside the expenses policy;
• Whether fuel allowances are within HMRC’s limit; and
• Whether the costs were incurred for the benefit of the charity.

Examples of expenses that can typically be repaid include, but are not limited to:

• The costs of travel to and from trustee meetings or other charity events;
• The cost of accommodation and subsistence while away from home on charity business;
• The cost of meals while on charity business;
• The cost of postage, stationery, phone calls and similar expenses while on charity business;
• The cost of training or other materials relevant to a trusteeship; and
• The cost of support for disabled trustees, such as specialist transport or provision of accessible documentation (e.g. braille).

Where it is unclear as to whether or not an expense should be repayable, it may be necessary to seek advice from the Charity Commission.

Accounting for Trustee expenses

As with other charitable expenditure, when a trustee is reimbursed for an expense, this should be recognised in the appropriate fund and expense category of the nominal ledger.

In addition, charities that prepare accounts on the accruals basis must follow the requirements of the applicable SORP, including certain disclosures around trustee expenses. These include the total amount of trustees’ expenses, the nature of these expenses, and the number of trustees involved.

At Carpenter Box we can assist trustees in understanding their duties and responsibilities. If you would like to discuss anything further please get in touch with a member of our Not For Profit team on 01903 234094.