In this article we provide a guidance not on how professional membership bodies can enable members to gain up to 40% off their annual membership subscription fee via tax relief approval (via inclusion on the HMRC List 3).
In real terms you could provide your members with this discount (indirectly via inclusion), however continue to receive their full annual subscription fee. It is a complete ‘membership no-brainer’!
Why should my organisation apply for inclusion on the HMRC List 3?
On successful approval from HMRC, professional and learned society membership organisations/associations become eligible organisations for members to claim tax relief for their annual membership subscription fees.
Example – John Brown is a Fellow of the Chartered Institute of X. The institute is ‘approved’ by HMRC and charges an annual membership of £100 for Fellowship. If John Brown pays the basic rate of tax (20%) he is eligible to claim £20 against his annual income tax bill. If John Brown pays the higher rate (40%) of tax he is eligible to claim £40.
By gaining HMRC approval you will be able to substantially reduce the actual cost of membership (without discounting fees) in real terms and therefore membership may be more attractive/affordable to non-members. HMRC approval and the consequent tax relief can therefore help you attract new members and retain existing members.
HMRC allow tax relief here because they accept that membership of such organisations can often be a necessary requirement of the member’s work. However, please note that if the membership subscription is paid by the employer there is no tax relief available to the benefiting employee.
Case Study – The Royal Town Planning Institute (RTPI) is a professional membership organisation that has gained approval. Related information is communicated to members on this dedicated web page here.
What is the Criteria for Inclusion on HMRC List 3?
HMRC may approve a professional organisation for inclusion on the professional bodies approved for tax relief (list 3) if its main purpose is to:
- share or advance professional knowledge
- maintain or improve professional conduct and competence
- protect members from claims made against them while doing their job
How Can My Membership Organisation or Association Apply for Inclusion on HMRC List 3?
In the first instance check to see if your organisation already features on the HMRC List 3.
If Yes – Make sure your members are aware they can claim tax relief!
If No – Check the above criteria and consider applying for inclusion on HMRC List 3 via HMRC Form – P356
Note: The information contained within this document has been collected directly from Her Majesty’s Revenue Customs (HMRC) and should not be interpreted (in any way, shape or form) as direct financial advice from MemberWise Ltd.