Charity Trustee Expenses Policy

A trustee expenses policy sets out what your charity will pay back to trustees and the rules it follows when doing so. It draws a clear line between reimbursing genuine, reasonable out-of-pocket costs and the very different question of paying a trustee for services or as an employee.

The Charity Commission regulates charities in England and Wales, and trustees are responsible for governance and for compliance with charity law. A written expenses policy helps trustees show that charity funds are used properly and only for the charity's purposes.

The headline point is straightforward. Charities can reimburse trustees' genuine, reasonable out-of-pocket expenses, but paying a trustee for services, or as an employee, is restricted and depends on the governing document and the law.

Getting this wrong can create unauthorised benefits to trustees, conflicts of interest and questions over whether public money has been spent correctly. A clear policy protects both the charity and the individual trustee.

The Charity Commission's guidance on trustee expenses and payments (CC11) sets out the framework, and you can find it through the Charity Commission CC guidance collection.

Why the Commission Expects This Policy

Trustees serve voluntarily, and the principle of an unpaid board is central to how charities operate in England and Wales. Reimbursing out-of-pocket costs is allowed precisely so that being a trustee does not become something only wealthier people can afford.

Holding and following sound financial policies is part of good governance and reflects the expectations of the Charity Governance Code, a sector standard rather than a strict legal requirement. The Charity Commission's annual return also asks trustees about the charity, including whether key policies are in place.

A trustee expenses policy works alongside your wider financial controls. It gives staff and volunteers a consistent rule to apply, and it gives the board an audit trail when expenses are questioned.

1. What Counts as a Reimbursable Expense

Genuine out-of-pocket expenses are costs a trustee has actually incurred while carrying out their duties for the charity. They are reimbursements, not income or reward, and they should leave the trustee no better and no worse off.

Typical examples include travel to meetings, reasonable accommodation when travel is unavoidable, the cost of phone calls or postage on charity business, and care costs that allow a trustee to attend (for example childcare or support for a disabled trustee). The test is whether the cost is genuine, reasonable and necessary for the role.

Your policy should state what the charity will reimburse, what evidence is needed (such as receipts), any rates that apply, and who authorises payment. It should also confirm that expenses are paid only for actual costs and not rounded up or estimated.

2. Paying Trustees for Services or as Employees

Paying a trustee is a different matter entirely from reimbursing expenses. CC11 makes clear that paying a trustee for a service, or employing a trustee, is restricted and depends on what the governing document allows and on the law.

Before any such payment is considered, trustees must check their governing document, confirm there is a lawful basis, and be satisfied the payment is in the charity's best interests. In many cases specific authority or Charity Commission consent is needed, and trustees should take advice rather than assume the payment is permitted.

Where a payment to a trustee is even discussed, conflicts of interest arise. The trustee who stands to benefit must not take part in that decision.

3. Managing the Conflict of Interest

Decisions about trustee expenses, and especially about paying trustees, must be handled under your conflicts of interest arrangements. Charity Commission guidance (CC29) requires trustees to identify, declare and manage conflicts of interest, remove a conflicted trustee from the relevant decision where needed, and record what happened.

A register of interests is good practice and helps the board spot where a payment might benefit a trustee or a connected person. You can read the detail in the Charity Commission conflicts of interest guidance (CC29).

4. Linking Expenses to Your Financial Controls

Trustee expenses sit inside your internal financial controls. CC8 describes controls such as segregation of duties, authorisation limits, dual authorisation of payments, bank reconciliations and oversight of income and expenditure, all of which safeguard charity funds and reduce the risk of fraud and error.

Applying these controls to expenses means no trustee approves their own claim, claims are checked against receipts, and payments are recorded so the board can review them. Further detail is in the Charity Commission internal financial controls guidance (CC8).

Quick Reference: Expenses Versus Payments

Situation	Allowed?	What trustees must do
Reimbursing genuine, reasonable out-of-pocket costs	Yes	Pay actual costs against evidence, under the policy
Travel, accommodation and care costs to attend duties	Yes, if reasonable and necessary	Reimburse the real cost, keep receipts
Paying a trustee for a service	Restricted	Check governing document and law, manage the conflict
Employing a trustee	Restricted	Confirm lawful basis, take advice, record the decision
Rounding up or estimating a claim	No	Reimburse actual costs only

What Trustees Must Do

• Adopt a written trustee expenses policy and make sure all trustees and relevant staff know it.
• Reimburse only genuine, reasonable out-of-pocket expenses that have actually been incurred.
• Require receipts or other evidence before any expense is paid.
• Check the governing document and the law before any payment to a trustee for services or as an employee is considered.
• Declare and manage conflicts of interest, removing the affected trustee from the relevant decision.
• Record expense claims, approvals and any trustee payment decisions so the board has an audit trail.
• Review the policy regularly and update it when the charity's activities or governing document change.

Common Mistakes

• Treating a payment for a trustee's services as if it were the same as reimbursing expenses.
• Paying a trustee without first checking that the governing document and the law allow it.
• Letting a trustee take part in a decision that benefits them financially.
• Reimbursing estimated or rounded amounts rather than actual costs supported by receipts.
• Allowing trustees to approve their own claims with no second check.
• Having no written policy at all, so claims are handled inconsistently.

How Policy Pros Can Help

We write bespoke charity policies that match your governing document, your activities and the way your board actually works. A clear trustee expenses policy gives your board confidence that funds are spent properly and that any payment to a trustee is handled lawfully.

You can see how we work through our charity policies and procedures service, and we can prepare a full set of documents in one place. To put your expenses policy in context, read our guides to charity internal financial controls (CC8) and managing trustee conflicts of interest (CC29).

For the wider picture of what the Commission expects, see our charity policies and annual return guide, which links every core policy together.