Finance FAQs

This depends on what is written in the constitution for your u3a. A constitution may state that the Committee has the right to set the annual membership fees without a vote by the membership.

However, even if this is allowed by a constitution, it is not best practice. Best practice is to make members aware of proposed changes either before or at a General Meeting, to ensure member approval.

We recommend that records are kept for 3 years, if your u3a does not claim Gift Aid.

If your u3a claims Gift Aid then records must be kept for a minimum of 6 tax years (March to April) since the last payment was made. Keeping records for 7 years ensures that this requirement is met.

Paper or electronic records are acceptable.

The Privacy Policy for your u3a should explicity state the length of time that you will keep member data on file.

Each u3a needs to do their own research and make their own decision. However here are some pointers for you to consider.

Beacon comes with an inbuilt facility to incorporate PayPal. If your u3a uses Beacon, it is probably worth offering PayPal as a payment method to your members. The only additional cost is the fee that PayPal charges.

Members do not need a PayPal account to pay by this method. A credit or debit card can also be used.

The u3a will need to set up a PayPal account.

In PayPal you can download reports  to review the payments paid via this method.

On the downside, setting up a PayPal account can be very complicated as can changing the contact person on your u3a’s PayPal account.

Yes, it is possible to pay for a speaker but we recommend that this is done by exception.

The ethos of u3a is that there is no need to pay for a speaker; speakers come from members of the u3a movement. This ensures that u3as abide by the guiding principles, in particular the principle of Mutual Aid.

u3as cannot pay a fee to speakers who are members of a u3a.

Where possible, it is better to pay expenses rather than a fee. Expenses must be reasonable and agreed in advance. Expenses can be paid to u3a members.

When payment is necessary then the following steps should be followed:

• The speaker’s fee and expenses should be agreed in advance.
• The cost must be reimbursed to the speaker through the u3a’s accounts.
• If the Speaker wants the u3a to donate the fee to another charity, this needs to be agreed in writing in advance. If the u3a agrees to pay the charity directly, the Speaker needs to sign a declaration to confirm this. This declaration should be kept for accounting purposes.
• The cost should be recorded in your accounts as “speaker fees.”

Example wording when paying a charity in lieu of speaker fees:

I confirm that I have asked [insert u3a name] u3a to pay the amount of [insert fee] directly to this charity: [insert name of charity]. This donation is in lieu of the fee/expenses due to me as a speaker to your u3a on [insert date]
This is a donation paid on my behalf to the above charity.
Signed ………………………… Date ………………………

Yes, it is possible to pay for external tutors but we recommend that this is done by exception.

The ethos of u3a is that there is no need to pay tutors; learning is shared by members of the u3a movement. This ensures that u3as abide by the guiding principles, in particular the principle of Mutual Aid.

Paid tutors must not be a member of any u3a.

When a u3a hires a tutor, it is the responsibility of the Trustees to ensure that the tutor is self employed, pays their own tax and has Public Liability insurance. Ask teh tutor to provide you with a UTR (Unique Tax Reference) number and a copy of their Public Liability Insurance certificate. Ask to see these documents once a year.

The group using a paid tutor cannot be subsidised by the u3a.

If members want to have a group with a paid tutor, but the committee do not agree, then this cannot take place as a u3a activity.

Yes a free or discounted place can be accepted, but the benefit of this must be shared by all members on the trip.

The organiser must still pay to attend. Any free or discounted place must be used to reduced the cost for all members.

No, your u3a is not liable for corporation tax.

However, if HMRC send you the form to fill in, you must complete and return it within the specified timeframe.

Do not ignore it.

If you don't complete the form then you will receive a financial penalty. Your u3a will be liable and must pay the financial penalty, even if it is later confirmed that your u3a is not liable for corporation tax.

The form is quite straightforward to complete and most sections are not applicable.

In most cases this is now completed online.

The amount of financial reserve will vary from u3a to u3a.

Reserves are regarded as the amount of money needed to function and needed to fulfil all known obligations. No fixed period is defined, but many u3as chose a period of 12 months.

Budgets for the coming year, along with the previous year’s accounts, should be used to estimate the value for a financial reserve.

The budget should include all known expenses that need to be paid e.g. contracts with venues, Beacon and SiteWorks running costs, u3a Matters subscription fees, monies needed to pay the Annual Return to the Trust etc.

Yes, you can do this. This is effectively subsidising a u3a activity.

The activity must be open to all members, even if it is not possible for all members to attend. If numbers need to be limited then we suggest places are offered on a first come, first served basis.

Make sure your u3a still has enough reserves to operate for the next 12 months.

Yes, your Committee can decide to offer a nominal fee, or zero fees, if this meets the terms in your constitution.

Your reserves will need to cover all running costs and payments to the Trust, including the Annual Return and any digital services such as Beacon or SiteWorks.

If you decide to offer free membership, i.e. zero fees, you are still covered by the Trust insurance policies.

Dual authorisation is the strong recommendation.
It may be required and written in the constitution for your u3a.

Unfortunately, many banks have been reluctant to provide this facility for smaller unincorporated charities.

If your bank is not willing to offer dual authorisation then you could create a process for your Committee to follow that acts like dual authorisation.

You might set up a fellow trustee with sight of the account and notify them by email of your proposed payments, listing what you intend to pay and when. They can then reply to virtually authorise this for you and can even check the account when the payment has gone through. If payments are being made by debit card then a similar
process for authorising payments will also need to be in place.
Remember that if it is your Treasurer that is posting the request for approval then that is the first authorisation. You only then need one additional level of authorisation.

The u3a committee decides what happens to all u3a funds.  Even when funds are held in separate bank accounts, linked to separate groups and activities, all funds paid to a u3a are the assets of that u3a. 

Additionally, if a group closes, any excess funds that may have built up to support with the operation of this group must be absorbed into the u3a general fund. The members of the group that has closed do notget to decide what happens to any surplus money.

Yes, you can do this but it is important to keep accurate accounting records so that this is recorded as payment for services provided and not a donation to a charity.

Make sure the payment is described as "Room Hire" in your accounts.

Yes, an independent examiner can be a member of your u3a but they must not be a Trustee or a member of your Committee.

The examiner must not be related to a Trustee or a member of your Committee. This includes related by marrige, or civil partnership, or as business partners. E.g. A treasurer cannot ask their son-in-law.

Somone acting as an independent examiner does not need an accounting background but they do need an understanding of basic record keeping.

Common practice across the u3a movement is to ask a treasurer from another local u3a to examine your accounts. It is standard practice for the independent examiner to be appointed by the members at the AGM.

It depends.

An accounting period can be shortened as often as you like but it can only be extended once every five years.

It is not possible to alter the accounting period if the 
deadline for filing your accounts has already passed. The maximum you can extend this to is 18 months.

It depends. There is not single solution for this question.

Cash accounting is the simplest method but has its limitations. A cash accounting system will tell you what money you have in your account and what money you have received and paid out.

However, when running a vibrant u3a, some of the money that is held as cash in the u3a account may already be allocated for future payments. For example, you may have collected money from members for a trip but you haven’t yet paid the costs of the trip. If this happens at the end of an accounting period then the accounts will show a “false” surplus. There may also be income not yet received. Therefore your cash account may not demonstrate an accurate picture of what your u3a is worth.

Accrual accounting is able to take into account future payments and outstanding financial obligations as well as expected receipts as well. This system provides trustees with a more accurate picture of the charity’s financial situation.