Are freemason membership fees taxable?

Are freemason membership fees taxable?

The case. The Union Grand Lodge of England (UGLE) is the governing body for most freemasons in England and Wales. It has net assets of £70 million, is a non-profit-making body with 175,000 members, split into 6,500 different lodges. Some members can belong to more than one lodge. The issue was whether the monthly subscription fees paid by members qualified for VAT exemption - the total VAT involved exceeded £2.8 million. HMRC was of the opinion that the fees were standard- rated.

The law. A VAT exemption applies to membership fees for non-profit-making bodies whose aims are of a “political, religious, patriotic, philosophical, philanthropic or civic nature” . The services must also be “in the public domain” . The UGLE argued that it met these criteria and that the fees should therefore be exempt.

The decision. HMRC agreed that UGLE had philosophical and philanthropic aims but these were not its only or main aims. It also had social aims as well as intentions for self-improvement. There were rituals and ceremonies involved for those wanting to become members.

The tribunal noted that one of the main philanthropic aims of the body was to “support freemasons and their dependants in distress” . Although this aim was definitely intended to be philanthropic, helping members with problems, it was not an aim which qualified for exemption for VAT purposes. The appeal was therefore dismissed.

Key points.This decision is a warning that all relevant boxes need to be ticked in order for your supplies to be exempt from VAT. The provision of funding for freemasons and their relatives who had financial problems meant that the aims of the Grand Lodge fell short of the requirements as far as being a philanthropic body was concerned. Its membership fees were standard-rated.