Group 10 of Schedule 9 to the VAT Act 1994 exempts services closely linked with and essential to sport or physical education when they are supplied by an eligible body to an individual taking part. An eligible body must be non profit making, have a non distribution clause, apply its playing surpluses to its facilities or to non profit purposes, and not be under commercial influence. Since 1 January 2015 the exemption no longer depends on the customer being a member, so pay and play users of a qualifying club or trust can be exempt too.

What does Group 10 exempt?

There are three items. Item 1 exempts the right to enter a competition in sport or physical recreation where all the entry money goes towards prizes in that competition. Item 2 exempts competition entry granted by an eligible body established for sport or physical recreation. Item 3, the main one, exempts the supply by an eligible body to an individual of services closely linked with and essential to sport or physical education in which the individual is taking part. Note 1 excludes residential accommodation, catering and transport from Item 3.

HMRC Notice 701/45 (paragraph 3.1) reduces Item 3 to four conditions: the activity is a sport or physical education, the service is closely linked and essential to it, the service goes to an individual, and the supplier is an eligible body. Fail any one and the supply follows its normal liability, usually the standard rate.

Which activities and services count?

Notice 701/45 paragraph 3.2 lists accepted activities, from aikido and angling through exercise and fitness, movement and dance, and yoga, to weightlifting and wrestling. An activity not on the list can be put to HMRC for a view. Paragraph 3.3 treats playing, competing, refereeing, umpiring, judging, coaching and training as closely linked services, together with changing rooms, showers, playing equipment, equipment storage, match fees for the playing facilities, and moorings, hangarage and workshop use. Spectating and administration are not included.

The table at paragraph 3.4.2 gives the liability of common income for an eligible body:

Income Liability
Court, pitch or green fees; changing rooms and equipment Exempt
Playing subscriptions and joining fees Exempt, subject to apportionment rules
Social or non playing subscriptions Standard rated
Spectator admission Standard rated
Catering, bars, gaming machines and social functions Standard rated
Parking and buggy hire Standard rated
Sponsorship income Standard rated

Coaching by a self employed professional, or refereeing by a self employed VAT registered referee, is not exempt under Group 10 because the supplier is not an eligible body. Coaching may still be exempt under the education rules in some cases; see private tuition and VAT.

What makes a body an eligible body?

Note 2A to Group 10 requires the body to be precluded from distributing profit (or allowed to distribute only to another non profit making body), to apply profits from exempt sports supplies to the continuance or improvement of its facilities or to the purposes of a non profit making body, and not to be subject to commercial influence. Note 2C allows a distribution to members on winding up to be ignored. Notice 701/45 section 4 adds that a non distribution clause does not settle the question on its own: HMRC looks at the constitution, the activities and how funds are actually used. The notice gives example clauses for an unincorporated club and a company limited by guarantee, and explains how a company limited by shares can amend its articles to remove dividend rights.

What is commercial influence?

Notes 4 to 7 are anti avoidance rules aimed at commercial operators who set up a non profit vehicle and then extract the value through rent or management fees. For supplies made on or after 1 January 2003, a body is under commercial influence for a sports supply if, in the three years ending with that supply, a person associated with it (such as an officer, shadow officer or connected person) made a relevant supply to it, received an emolument from it, or had an agreement to do either later. Relevant supplies include grants of interests in sports property, management or administration of the body’s facilities, and any supply priced above arm’s length. Emoluments here mean pay calculated by reference to profits or gross income, so an honorarium for the secretary is fine unless it is linked to profits (paragraph 5.7.1). A committee member’s firm doing routine bookkeeping or legal work is not treated as management and administration (paragraph 5.7.2).

How are membership schemes treated?

Before 2015, Item 3 excluded supplies to non members where the body ran a membership scheme. The Value Added Tax (Sport) Order 2014 (SI 2014/3185) removed that restriction from 1 January 2015, so a qualifying club or leisure trust can now exempt casual bookings, visitor green fees and pay as you play sessions, provided the other conditions are met.

Subscriptions themselves are covered in detail in the guide to membership subscriptions and VAT. In outline, Notice 701/45 paragraph 3.5 says playing subscriptions and matching joining fees are exempt; social and non playing memberships are standard rated; a waiting list fee is exempt only if it is deducted from the first exempt subscription and refundable if the person never joins; and life memberships are exempt where they buy playing rights for life and the annual subscription is exempt. Loans, levies, shares or debentures required from members are treated as further consideration for membership.

For leisure trusts selling all inclusive packages, paragraph 3.5.8 asks why a typical customer buys. Where the predominant reason is to use the pools, courts and pitches, the single supply is exempt. Where it is mainly to use standard rated facilities such as a sauna, the whole package is standard rated.

Who counts as an individual taking part?

Paragraph 3.4.1 accepts family groups, informal groups booked by one person, and corporate or unincorporated bodies where the true beneficiaries are individuals taking part. A company buying a golf day to entertain staff or guests is the true beneficiary itself, so the supply is standard rated. If employees largely pay for it themselves through a social club, it can be exempt even with a small company subsidy. A golf society booking on behalf of its members is treated as supplying the individual members. Supplies to tour operators within the Tour Operators’ Margin Scheme can also be exempt.

What about hiring out sports facilities?

Hiring a pitch, hall or court is a separate question. Item 1(m) of Group 1 standard rates the grant of facilities for playing sport, whoever supplies them. Note 16 brings the hire back into the property exemption if it is for a continuous period over 24 hours, or for a series of 10 or more sessions where each is for the same activity at the same place, the gap between sessions is between one and 14 days, the whole series is paid for under a written agreement, the hirer has exclusive use, and the hirer is a school, club, association or representative body. Notice 742 section 5 explains this. An eligible body hiring a court to an individual player can instead rely on Group 10.

How does exemption affect VAT recovery?

Exempt income restricts input tax. Paragraph 3.5.10 gives the typical split for a club: VAT on bar stock and the area behind the bar is directly taxable and recoverable; VAT on the clubhouse generally and facilities open to everyone is residual; VAT on facilities used only for exempt playing is not recoverable. Paragraph 2.3 warns that charitable status does not give a club relief on building works such as a pavilion, so grant applications should allow for irrecoverable VAT. The calculations follow the partial exemption rules.

How does this work in practice?

Illustration only. A cricket club limited by guarantee has a non distribution clause, pays its groundsman a fixed wage and pays nothing to officers. It rents its ground from the local council. Playing subscriptions, nets sessions sold to non members and junior coaching run by volunteers are all exempt. Bar takings, car park charges and a shirt sponsorship deal are standard rated (see sponsorship and VAT and car parking and VAT). If the club later rented its ground from a company owned by its chairman, that would be a relevant supply from an associated person and would put it under commercial influence for the next three years.

What are the common mistakes?

  • Treating non profit as enough. The body must also apply surpluses correctly and pass the commercial influence test every time it makes a sports supply.
  • Exempting corporate golf days. Where the company is the true beneficiary, the supply is standard rated.
  • Still restricting exemption to members. The membership condition went on 1 January 2015.
  • Exempting everything a club sells. Spectator tickets, bar sales, parking and sponsorship remain standard rated.
  • Overlooking events. One off fundraising events by qualifying sports bodies may be exempt under a different group; see charity fundraising events.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.