Who you can pay, and how, is one of the trickier areas for charities — because the sector layers charity-specific rules on top of normal employment law. Get it wrong and you risk tax problems, a governance breach, or accidentally turning a volunteer into an employee. Here's the map.

Employees: PAYE and pensions, like anyone

Charities and CICs that employ staff run PAYE and auto-enrolment pensions exactly like any employer — register with HMRC, run payroll with Real Time Information submissions, enrol eligible staff into a workplace pension. Being a charity doesn't exempt you from employment obligations; if anything, funders expect you to model good practice. (Our Impact package includes payroll and pensions.)

Freelancers and contractors: mind the status line

Using a freelance fundraiser, bookkeeper or project worker? Make sure they're genuinely self-employed and not an employee in disguise — the same employment status and IR35 considerations apply as anywhere. Getting this wrong can leave the charity liable for unpaid PAYE and NI. When in doubt about a regular, controlled worker, check the status rather than assume.

Trustees: the big restriction

This is the one that surprises people: trustees generally cannot be paid for being trustees. Charity trusteeship is a voluntary role, and paying trustees for their trustee duties requires specific authority (in your governing document or from the Charity Commission) and careful management of the conflict of interest. Trustees can usually be reimbursed reasonable expenses, and in specific, properly-authorised circumstances be paid for providing a service to the charity — but this is governed territory, not something to do casually. (CIC directors are different — a CIC is a company and can pay its directors.)

Volunteers: expenses only, and be careful

Volunteers give their time free — and the crucial rule is to keep it that way in law. You can (and should) reimburse genuine, receipted expenses — travel, materials — but avoid anything that looks like payment for work:

  • Don't pay "thank you" cash or round-sum allowances — unreceipted payments can create tax liabilities and, worse, imply a contract.
  • Don't promise or require anything in return — obligations can turn a volunteer into a worker entitled to the minimum wage.
  • Reimburse actual costs against receipts, and keep the arrangement genuinely voluntary.
The accidental-employee trap A "volunteer" who's required to turn up to set hours, do defined work, and receives regular payments beyond expenses may legally be a worker — owed the minimum wage, holiday pay and more. It's an expensive surprise. Keep volunteering genuinely voluntary and expenses genuinely expenses.

Getting it right

The safe pattern: employees on PAYE, freelancers with status checked, trustees unpaid (expenses only, unless properly authorised), volunteers reimbursed against receipts and nothing more. We set charities and social enterprises up with compliant payroll, sound treatment of freelancers, and clean expense processes — so paying people helps your mission rather than creating risk. Get started.