Minimum Membership Payments: Difference between revisions

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Updating FAQs
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'''When will this be implemented?'''
'''When will this be implemented?'''


It relies on HMS changes so we hope to get it done in 2023.
The changes to HMS will be deployed on October 1st. If your standing order is below £5 currently, and you'd like to remain a member, we would recommend updating this before your next payment date.
 
We will provide advanced notification and do direct communication with members paying less than £5.
 


'''Why £5 a month?'''
'''Why £5 a month?'''

Revision as of 15:15, 24 August 2023

There are plans from the Trustees to introduce a £5 minimum membership fee. There is a very important reason for this: the Hackspace went over the VAT threshold which will cost a lot of money. We have reported this to the HMRC - more details below.

We are also not in the black in regards to total yearly income versus costs, meaning we will want to get more income to cover costs. Therefore if we go over at the VAT threshold we have to register and pay VAT of 20% on all our income. Doing so will cripple the finances again, even though income is higher the actual amount we can use is much lower.

The Current Situation

Currently members can pay what they want to receive full access to the Nottingham Hackspace. This is often described as 'Pay what you think it’s worth'. There is only one level membership and access to the space. Members of the Teams who run the space and Trustees are paying members.

Over 10 years of existence of the space point to the success of this strategy.

We currently have a recommended monthly payment for membership of £15.

What do members pay

Actual payments range from £0.01 to over £40.00 a month, and these amounts are paid by both active and non active members. Non active members are those who have not visited the space in the last 3 months.

We’d like to thank all members of the space for their support and usage of the space.

Historical Situation - going over the VAT Threshold

In Financial Year 20/21 the space’s gross receivables exceeded the £85k threshold for VAT registration. This was May through July 2020. We are forced to notify the HMRC and pay VAT for the period. This was expected to be around £4000, since we reported it and expect no fines, it might be larger if fines are applied (and would be a lot larger if we didn't report it but the HMRC did check us). The HMRC was notified via. a Tax Specialist in May 2022 and we finally paid this in August 2023 - the total amount of VAT paid was £3,161.93 a not insignificant figure given it was only for 3 months.

VAT Advice

To avoid future fines and stay viable we took advice from a Tax specialist. We believe registering for VAT would stop the Hackspace being financially viable since it would require all income to have VAT applied.

After advice from the Tax Specialist and our Treasurer the Hackspace is continuing a recommended membership of £15. It is also going to be implementing a minimum membership payment of £5. All members will continue to get the same access to the Hackspace. If someone is overusing the Hackspace at the minimum amount they will still be asked politely to increase it.

Anything over the £5 will be considered a donation to the Hackspace similar to donations taken by the Stripe functionality on HMS.

The £5 Membership Payments, other income for Snackspace/tool usage, events and workshops will count towards the VAT threshold. Donations to the space do not.

How does membership work currently?

Membership at the space is designed to be low admin. We do not have any admin staff to manage members and payments.

To join the space members set up a bank transfer to the Hackspace with a code, that ties their payment to their membership account on HMS.

When the space receives payment with a code access to the space is granted via HMS Gatekeeper for the following month.

To stop membership members just need to stop their payment, and access is automatically removed. Stopping and pausing membership is under the control of members, not the Hackspace.

This is a very low Admin membership management and access system. The Hackspace needs a system with very low overhead as it has no paid Admin Staff to run a manual process.

What will happen when we have a minimum membership amount?

Currently anyone transferring money to the HMS back account with a valid code is granted membership, and access to the space via HMS.

When we have a minimum payment of £5, transfers from £0.01 to £4.99 will be treated as a donation to the space, and will not result in membership or access via HMS Gatekeeper.

Transfers of £5 and over will enable access to the Hackspace via HMS Gatekeeper.

Amounts of over £5 will be treated as a donation to the Hackspace. Donations do not count towards the VAT limit the Hackspace has.

FAQ

When will this be implemented?

The changes to HMS will be deployed on October 1st. If your standing order is below £5 currently, and you'd like to remain a member, we would recommend updating this before your next payment date.

Why £5 a month?

The considered amount to access facilities needs to be a reasonable sum – 1 penny may be our current “minimum” but 12p to access the space for the year may not run well with the HMRC once we had accountancy advice

£5 is a good minimum to stick to and we still allow flexibility around dropping membership and rejoining by standing order.

If we have all ~650 members paying:

  • £5 / month (£60/year) is £39,000
  • £10 / month (£120/year) is £78,000

The latter is too close to the £85,000 VAT threshold when we include snackspace (laser/machine usage, vending machine etc.), workshops and events income on top.


I have a joint account - how much do I need to pay?

The minimum membership fee is £5/month per member, meaning if you have a joint account with one other person, the minimum transaction amount for obtaining membership is £10/month.

I’m unable to afford the minimum membership fee - can I remain a member?

Unfortunately we cannot account for people who pay less than than the minimum membership fee. Anything below this would undermine the minimum membership fee and lead to problems around VAT.

What happens if I continue to pay under £5/month?

The payment will trigger an email informing you that the amount is below the minimum membership fee. You will be asked to adjust your standing order if you wish to remain a member but it will eventually lead to revoking your membership. Any further payments below the minimum will be considered a donation to the space.

How do I cancel my membership?

First of all, we’re sorry that the necessary changes have resulted in you feeling this way. You can cancel your membership at any time by contacting your bank (or using online banking) to stop further standing order payments. Your membership will then end shortly after a month since your last payment.

Presentation

A presentation was made at a recent members meeting that might be useful to read through: Nottingham Hackspace Minimum Membership Payments