Discretionary Accounts Guidelines

1. General Statement

Discretionary accounts are defined in UCL's Financial Regulations and these guidelines provide further guidance on how they should be used and funded. It should be remembered at all times that any discretionary funds are subject to UCL Financial Regulations and policies and are deemed to be the property of UCL.  A Working Group of Academic Board was established to review guidance on the use of Personal Discretionary Accounts. The guidelines they proposed were accepted by the Senior Management Team in March 2017 and are now to be considered as forming part of these Guidelines. They are appended below. They relate to Personal Discretionary Accounts, whereas these Guidelines apply to all Discretionary Accounts, except where superseded by the new guidelines for Personal Discretionary accounts.

2.1 Accounts for new activities should be set up via the School Finance team who will advise on the type of account to be set up. It is important that the correct account is set up as this impacts both the VAT and corporation tax treatment.

3. Activity

3.1 Income should be invoiced via MyFinance or delivered through WPM if paid for via a credit card. This will ensure that the correct VAT treatment is applied to the income.

3.2 All direct and indirect costs (including VAT where this is charged) should be posted to the account to which the income is being allocated. Where staff are working directly on delivering income, their costs should be recharged to the correct account. Where appropriate, recharges could include an overhead for administrative costs or for staff who are funded from other sources (see paragraph 8 of Guidelines on Personal Discretionary Account use). This should be discussed with the School Finance team and the Faculty Manager/Head of Department/Dean as appropriate.

3.3 All non-core activity should aim to deliver a surplus, under no circumstances should non-core activity be undertaken at a loss. This does not apply to Personal Discretionary accounts. If during the activity, the financial position changes, the School Finance team should be notified. Costs should not be charged to other accounts in order to make an activity profitable.

4. Surpluses on activity

4.1 Surpluses on discretionary activity will be rolled forward at the end of each financial year. Each account will be mapped to an alternative account which may be allocated as either a faculty, departmental or personal discretionary account, depending on the nature of the activity which generated the surplus. 

4.2 This will be allocated by the School Finance team in discussion with the Departmental Administrator & Faculty Manager. This does not apply to Personal Discretionary accounts. More than one in year account may be mapped to a carried forward account.

5. Deficits on activity

5.1 Should an activity make a loss during the year, this must be allocated to a reserve account with a positive balance and the deficit transferred to this account.

6. Reserve Accounts

6.1 It is generally recognised that surpluses generated by non-core activity are for the use of the department which carried out the activity and can be used to fund activity for which core or research monies are not available. This could include:

  • Conference attendance
  • Specialist equipment purchase
  • Replacement of large pieces of equipment
  • Contribution towards Estates projects and refurbishments
  • Non-sponsored research activity
  • Stipends, studentships and other student support
  • Bridging funding for staff posts between alternative sources of funding

As with in-year expenditure, all expenditure against reserve accounts is subject to UCL's Financial Regulations and other policies.

6.2 Where staff are being funded for a significant length of time from a reserve account, the department/faculty/school may wish to charge an overhead. This would be a contribution towards the running costs of UCL and would be equivalent to the contribution expected on a core funded activity or the overhead recovered from sponsored research.

7. Carried forwarded balances

7.1 All reserve accounts should remain in surplus and expenditure, whether on staff or non-staff, should not be committed which would cause an account to become "overdrawn" and result in a deficit position. Whilst it is the responsibility of the department to monitor all accounts, School Finance teams will monitor all reserve accounts on a quarterly basis and work with the Faculty Manager, Departmental Administrator and Head of Department to put in place a plan for making good the deficit. No accounts should remain in deficit for more than 24 months.

7.2 Some departments will have a number of accounts, some of which are in surplus and some of which are in deficit. These may be netted off, but left as individual accounts, if agreement is obtained from Central Finance. However, the total position in these circumstances should not deteriorate and any surpluses made in future years should be allocated against deficit accounts in the first instance, rather than adding to accounts in surplus.

7.3 Where an account is in deficit, and there is no agreement in place with Central Finance to net off against surplus accounts, no further expenditure should be charged to that account. Any staff being charged to the account should be moved to an account which has sufficient funds available.

Guidelines on Personal Discretionary Account Use

8. Background

8.1 Personal Discretionary accounts are held by academic staff and consist of funds obtained from many sources, both external and internal to UCL. These include historical remnants of grants (before this practice ceased in 2008), fees from media, expert witness fees, consultancies, prizes; as well as allowances for conference attendance, and running costs for undergraduate and postgraduate student projects, which are transferred internally.

9. Management of Discretionary Accounts

9.1 All Schools and Faculties (other than the IoE, which is currently subject to different regulations governing their Development accounts) should have the same basic rules governing Discretionary accounts.

9.2 All academic staff should be allowed to have a personal Discretionary account (but see (9.1) for IoE). No personal Discretionary accounts should be allowed to be overspent, and no-one but the account holder should be able to withdraw funds, unless they have permission of the account holder.

9.3 All staff with one or more personal Discretionary accounts should automatically receive monthly statements in the same format as normal grant statements, and be enabled to view their account(s) via MyFinance. Ability to track incoming payments should be improved.

10. Accounting on Discretionary Funds

10.1 Discretionary funds should not fall into the category of expenditure that is accounted for as part of a department or faculty’s overall budget, as these funds are straight in-and-out money, like research grants (on which none of the restrictions currently applied to Discretionary accounts are applied).

11. Specifics of Discretionary Account Use

11.1 No bona fide academic use of personal Discretionary funds should be refused, within the terms of the HMRC and UCL procurement/recruitment and expenses policies, as long as the funds are available and there are no on-costs incurred for UCL, other than the use of space. This includes salaries for post-doctoral and graduate research assistants, technicians and personal assistants; and stipends for PhD students and undergraduate interns. No prior approval or “business case” should be required, and there should be no annual limit on expenditure, as long as funds are available. Where possible Deans should be notified if expenditure is likely to be greater than £50k in a year, but prior approval is not required. If there are guidelines provided by the source of the money, these should be observed. Where an individual is employed (using funds from a discretionary account) for a period that qualifies them for redundancy rights, arrangements should be made to ensure that there are adequate funds to cover these costs when such contracts are terminated.

11.2 Regarding point (5), there should be no requirement to show that a grant has been submitted, in order to be able to use Discretionary accounts for fixed-term salaries or stipends, as long as funds are available.

11.3 Sign off approval for different expenditure levels should be as for research grants (see delegated authorisation limits), but this should not be used as a mechanism to delay or prevent expenditure from Discretionary accounts.

11.4 For uses where there is an on-cost to UCL (other than for PhD students which are dealt with below), the level of overheads should be 0 % (non-renewable) for staff contracts of 3 months or less, then a flat rate of 20 % on salaries, identical across faculties, except where a case can be made to the relevant Dean for waiving these overheads, e.g. where a charity or individual makes a donation and stipulates no overheads can be charged.

11.5 To avoid any doubt, PhD student funding should be considered a legitimate use of Discretionary funds, as long as students have been recruited by recognised recruiting and selection procedures. This includes full funding, matched funding and CRS funding. Stipends can be set at any level from the standard RCUK stipend level up to those set by other funding agencies (such as the Wellcome Trust). No overhead should be levied in relation to any expenditure on PhD students.

11.6 Discretionary funds should be available to match funding from any other source, as required.

11.7 Discretionary funds are viewed by HMRC as belonging to the University. It is for that reason that they are not liable for personal taxation. Discretionary funds that an academic has accrued from sources outside UCL should be considered in principle to be transferable to other recognised institutions if an academic moves from UCL, in the same way that grant funds can be transferred. This should be determined on a case-by-case basis at the discretion of the Dean. Similarly UCL should (and currently does) allow academics to transfer their Discretionary funds into UCL when they move from other institutions.


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