NIM13311 - Class 1A NICs: liability for Class 1A NICs: Class 1A NICs on sporting testimonials: example 3 - proceeds donated to charity

Virat is a cricketer who has been awarded a benefit for his services beyond just good performances for his club. Any proceeds are, therefore, not earnings derived from an employment, so they fall within the sporting testimonial rules.

Virat has indicated that he would like all the proceeds to be donated to charity.

Donation to charity using Payroll Giving

A series of events during the year raises a total of £700,000 after the sporting testimonial committee have deducted their expenses. The committee have already registered with a Payroll Giving agency and set up a scheme.

The £700,000 proceeds are not subject to tax and neither are they subject to Class 1A National Insurance. The £100,000 threshold is, in this case, not a consideration.

The entire £700,000 is donated to charity less any fees charged by the Payroll Giving agency.

At no stage does Virat receive any of the money.

Donation to charity without using Payroll Giving

If Virat receives the full amount and he then donated it to charity, then tax and Class 1A NICs must be deducted from the £700,000 less the £100,000 threshold. The charity may, of course, be entitled to claim Gift Aid on some or all of the donation.