There is a trustee on your board who drives forty minutes each way to every meeting and has never claimed a penny. She has not been told she can. Nobody has been unkind about it; the subject has never come up, and she assumed that not claiming was part of the deal.
It is not. Your charity can pay trustee expenses; you do not need Charity Commission approval to do it, and expenses are not a trustee payment or benefit at all. The Commission is direct about why this matters: paying expenses helps a charity attract and keep trustees, because individuals do not lose out financially for taking on the role.
If your board has never had an expenses policy and is not sure where to start, our charity governance support covers the policies a small board actually needs.
Why unclaimed expenses cost you trustees
Boards tend to treat expenses as an administrative question. The Commission treats them as a recruitment and retention one, and asks charities to check whether they pay expenses at all and to think about encouraging trustees to claim what they are entitled to.
The reasoning holds up. Someone deciding whether to join your board is doing sums, even if they never say so. Petrol, parking, a train fare, an afternoon of childcare, twelve times a year. For a retired trustee on a fixed income or a parent of young children, that is the difference between a role they can take and one they cannot. It is also, quietly, one of the reasons boards end up composed of people who can afford to be there.
That connects directly to how hard it has become to fill a seat. If you are struggling to recruit trustees, expenses are one of the barriers the Commission asks you to remove, alongside meeting times and the way the role is described.
Two points worth telling your trustees, because they answer the questions people are too polite to ask. Expenses are not taxable income. And they should not affect any state benefits a trustee receives.
What counts as an expense
An expense is a cost a trustee reasonably incurs to carry out the trustee role; most commonly travel to meetings. It also covers costs a trustee has met on the charity’s behalf, such as buying something for the charity or paying one of its invoices, and it is for each trustee to decide whether they are willing to do that. The costs should be reasonable, not excessive, and properly incurred.
The Commission sets out what can be treated as an expense:
- reasonable travel costs, including petrol, parking, congestion charges, public transport and taxi fares
- reasonable costs of overnight accommodation
- reasonable costs of food and drink
- telephone and internet subscriptions and other communication costs, but only the proportion used for trustee business
- translation of documents into Braille or into other languages
- booking a British Sign Language interpreter
- reasonable costs that enable a person with disabilities to carry out the trustee role
- reasonable costs for a carer or childminder
- reasonable costs of training, or training materials, that help a trustee perform the role; safeguarding training, for instance
Four of those are access costs, and they are worth pulling out of the list. Childcare, care costs, interpreters, and the costs that let a disabled trustee do the job are the ones boards least often think to offer and most often decide the composition of the board. A charity that pays them can recruit from a different group of people than one that does not, and that is a governance question rather than a budgeting one.
Ask for receipts or similar evidence that the trustee met the cost, except where that is impractical; very small claims, for example.
What your charity cannot pay
The exclusions are as specific as the inclusions:
- costs unrelated to charity business, such as personal business or personal engagements
- travel or accommodation for spouses, partners or family members who are not travelling on charity business
- excessive costs, on travel or accommodation, for instance
- telephone or other communication costs for business unrelated to the charity
- training or training materials unrelated to the trustee role, including anything serving a trustee’s own professional or academic interests
- private medical insurance
- school and boarding fees for dependants
The training exclusion is the one that catches boards out. Safeguarding training a trustee needs for the role is an expense. A qualification that advances their own career is not, even if the charity benefits from it indirectly.
And the consequence is worth stating clearly. Where trustee expenses are excessive, unreasonable or false, a trustee may have to pay them back.
What your expenses policy needs to settle
The Commission expects a policy, and specifies what it should cover. Seven things:
- what trustees can claim, and how
- what evidence is needed to support a claim
- that trustees declare the claim is accurate and was properly incurred
- when a trustee needs permission before incurring a cost – above a certain level, for instance
- how claims are approved
- that a trustee cannot approve their own claim
- how quickly expenses will be paid once claimed
That sixth point is the one small boards find awkward, because where the treasurer is the person claiming, somebody else has to sign it off. It is the same principle that runs through what your board delegates and what it keeps; nobody approves their own money. Where a claim is being approved at a meeting, the trustee claiming should not be part of that decision, and our guide to running a trustee meeting covers how that gets handled and recorded.
The last point matters more than it looks. A policy that says claims are paid within two weeks is a policy someone on a tight budget can rely on. A policy silent on timing leaves people waiting, and the ones who cannot afford to wait stop claiming.
Make sure claims actually comply with the policy once you have one. The Commission points to its guidance on internal financial controls for the wider picture, and expenses should be visible in the numbers the board sees; both in the annual budget and in what trustees review each quarter. A new trustee should be given the policy as part of their induction, not left to discover it in year two.
A board with no expenses policy usually has other policies missing too.
Expenses tend to be the point at which a board notices that nothing has been written down; no financial controls, no conflicts policy, no record of who approves what. A free clarity call will tell you which of those gaps matter now and which can wait.
Paying costs directly instead
Reimbursement is not the only route, and for some trustees it is the wrong one. Your charity can pay directly for a cost such as trustee travel, which means the trustee never goes out of pocket and there is no claim to process. For anyone who cannot comfortably front the money and wait, that is the difference between attending and not.
You can also pay trustees in advance to cover expenses, though this carries risk; mainly that the advance is more than the trustee needs. Where that happens, the trustee must repay the unspent amount unless the board agrees they can keep it towards their next expense. If you pay in advance, review the amounts regularly so they track what things actually cost.
There is also a disclosure point. Charities preparing accrual accounts must either give details of trustee expenses paid or confirm that none were paid, and charities preparing receipts and payments accounts should give the same information. Which type of accounts you prepare depends on your income and structure, which our guide to whether you need an audit or an independent examination sets out. Check the current Charities SORP or take professional advice on the detail.
Small payments and honorariums
This is a different thing from expenses, and the distinction matters. An expense reimburses a cost a trustee has actually incurred, and is not a trustee benefit. An honorarium is a payment; money the trustee did not spend and is not getting back. It is a trustee benefit, and it sits under different rules.
Charities sometimes want to make a small payment anyway: a gift to a retiring trustee after years of service, or a modest payment to a trustee acting as clerk. You must be satisfied it is in the charity’s best interests, and you should think about how it will look to beneficiaries, members and supporters who gave the money.
Charity Commission authority is not usually needed where the payment is small, and the Commission gives figures. For charities that are not companies, an individual payment of £1,000 or less. For company charities, an individual payment of £200 or less. In both cases, total payments to all trustees during the financial year must not exceed £1,000. Trustee expenses do not count towards that total.
Note the gap between those two figures. A CIO or unincorporated charity has considerably more room than a charitable company, and boards that changed structure at some point may be working to the wrong number. If your charity is a company and you want to give a retiring trustee more than £200, you need authority from the Commission under section 201 of the Charities Act 2011 and then approval from your members.
Everything beyond this – employing a trustee, paying one for goods or services, compensating loss of earnings, or paying for trustee duties – runs on separate rules and usually needs a power in your governing document or Commission authority. The Commission’s guidance on paying a trustee or connected person covers each of those. If your governing document contains a clause preventing any payment or benefit to trustees, that is a prohibition, and changing your governing document is the route. None of it affects expenses, which you can pay regardless.
One last thing for the risk register. A board where nobody claims is a board quietly subsidised by whoever can afford it, and that is a dependency worth naming before the person carrying it steps down. Everything in this article applies equally to every trustee, whatever their role on the board.
Policies are easier to write once than to fix later.
An expenses policy, a conflicts policy, financial controls and a record of who approves what all belong together, and most small boards build them one crisis at a time. Our ongoing support plans get them in place in the right order.
