VAT for sports clubs. What you need to know.

If you run a sports club, VAT can cost you thousands each year. It can also create risk if you get it wrong.

Many clubs either ignore VAT or assume they are too small to worry about it.

Here's what you need to know.

When does VAT apply to your club?

You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12 month period. That threshold applies in 2026 and you should always check the current figure with HMRC.

Taxable turnover includes income from:

• Bar sales

• Catering

• Room hire

• Sponsorship

• Advertising boards

• Some event income

It does not automatically include membership subscriptions. That depends on your structure.

Membership fees. Are they exempt?

If your club is a non profit organisation and provides sport or physical education to members, membership fees are often VAT exempt.

This exemption applies where:

• You are properly constituted as a non profit body

• Any surplus is reinvested into the club

• You do not distribute profits to members

• Many community amateur sports clubs and charities qualify.

If your club is a limited company that can distribute profits, the exemption may not apply.

If membership income is exempt, you do not charge VAT on it. However, you also cannot reclaim VAT on costs directly linked to that exempt income.

This is where clubs lose money. They fail to review whether they are structured correctly.

Bar and social income. Usually taxable.

Bar sales are almost always standard rated. That means you charge 20 percent VAT if you are registered.

The same usually applies to:

• Catering

• Ticketed dinners and social events

• Merchandise

If you are registered, you must charge VAT on these and submit quarterly returns.

Room hire and facilities.

Sports facilities hired to members can be exempt in certain circumstances.

However, casual hire to non members is often standard rated.

Long term hire arrangements may qualify for exemption. Short term or pay as you play bookings often do not and a small wording change in your booking terms can change the VAT treatment.

Mixed income clubs. Partial exemption.

Most clubs have both exempt and taxable income.

For example:

• £120,000 membership income, exempt

• £80,000 bar income, taxable

If you are VAT registered, you can reclaim VAT on costs linked to taxable income. You may only partially reclaim VAT on shared costs such as utilities, repairs, and insurance.

This is called partial exemption.

Many clubs do not calculate this properly. That can mean:

• Underclaiming VAT and losing money

• Overclaiming VAT and facing HMRC penalties

  
  

VAT windfall claims. Have you overpaid?

Some clubs have historically charged VAT on income that should have been exempt, especially sports subscriptions.

In certain circumstances, clubs may be able to submit a retrospective claim to HMRC for overpaid VAT. There are strict time limits, usually four years.

We have seen clubs recover five figure sums after a proper VAT review.

Governance and structure matter.

Your VAT position depends on:

• Your legal structure

• Your constitution

• Your non profit status

• How income streams are defined

A club that incorporates as a charitable incorporated organisation or community benefit society may access exemptions that a standard limited company cannot.

This is not just an accounting issue. It is a governance issue.

Practical steps you should take now.

1. Review your income streams. Break them down by type.

2. Check whether your turnover exceeds the VAT threshold.

3. Review your constitution. Does it clearly prohibit profit distribution?

4. Assess whether membership income is correctly treated as exempt.

5. Check whether you are missing partial exemption claims.

Do not assume your treasurer has it covered. Many volunteers do an excellent job, but VAT law is technical and changes regularly.

How Club Development Solutions can help.

At Club Development Solutions, we review your:

• Legal structure

• Constitution

• Income streams

• Policies and financial systems

  
  

We work with specialist VAT advisers where required.

We have helped clubs:

• Correct historic VAT errors

• Improve governance to secure exemptions

• Submit windfall claims

• Structure new income streams correctly

In some cases, the savings have exceeded £10,000. In others, we have reduced future VAT risk that could have led to HMRC investigations.

If you are unsure about your VAT position, get in touch. We will review your current structure and tell you where you stand.