20 March 2015
On Wednesday 18 March George Osborne delivered his final Budget of this Parliament.
Whilst there were no significant tax changes for the sector, the 2015 Budget detail did include some measures specifically directed at charities:
Gift Aid Small Donations Scheme
The Chancellor proposed to increase the annual donation amount which can be claimed through the Gift Aid Small Donations Scheme (GASDS) from £5,000 to £8,000. This will allow charities and Community Amateur Sports Clubs to claim Gift Aid style top-up payments of up to £2,000 a year, with effect from April 2016.
Claims for the GASDS are currently below initial projections; in 2014/15 only £23m had been claimed, well below the Government’s projection of £85m. The increase in the amount that can be claimed is expected to lead to a further £15m being claimed by the sector.
Whilst charity organisations have responded to say they are pleased that the cap has been raised, many are calling for the next Government to look at the restrictive entry requirements to GASDS. The NVCO has responded to the announcement, stating that whilst raising the cap will help those already benefiting from the scheme, it’s unlikely to address the restrictive claiming requirements that have stopped people signing up so far.
Gift Aid digital
Re-announced, following its introduction in the Autumn Statement 2014, are plans to include provisions in the Finance Bill 2015 to allow intermediary agencies to take a greater role in the gift aid process. This comes as a welcome change as it makes it easier for people to allow intermediaries to complete gift aid claims on their behalf for donations.
Subsidised fundraising training for smaller charities
The Office for Civil Society will take forward the procurement of a partner to deliver subsidised fundraising training to small charities in 2015-16.
New charitable fund structure
The Chancellor unveiled plans to introduce a new investment structure for charities called the Charity Authorised Investment Fund. The aim is to bring new investment funds established for charitable purposes under Financial Conduct Authority (FCA) regulation. The plans are currently in consultation with the FCA, the Charity Investors’ Group and the Charity Commission.
VAT help for certain charities
As previously announced during the Autumn Statement, hospice, search and rescue and air ambulance charities will be eligible for VAT refunds from 1 April 2015. The Chancellor has now announced that blood bike charities will also be included, in response “to the public campaign” to extend the scheme.
Military charity benefits
A further £75m of LIBOR fines will be going to military charities and veteran support over the next year. £25 million will be provided to help older veterans and the regimental charity of every regiment that saw service in Afghanistan will also receive funding worth a total of £10 million.
Listed Places of Worship Roof Repair Fund
The Listed Places of Worship Roof Repair Fund, announced in the Autumn Statement, will be trebled to £40 million due to its popularity.
Inheritance Tax and deeds of variation
The Chancellor announced plans to review the uses of deeds of variation in relation to inheritance tax. A proposal to abolish Deeds of Variation over twenty years ago was strongly resisted by the charity sector because abolition would have had an impact on legacy income. It will be a concern, therefore, that any changes to the use of deeds of variation could impact on those charities with significant legacy income.
Diverted profits tax
Another announcement which may have potential implications for the charity sector is the plan to introduce a new diverted profits tax. This new tax was announced in the Chancellor’s Autumn Statement as a measure to counter the use of aggressive tax planning techniques by multinational enterprises to divert profits from the UK. However, since being announced, there has been talk in the sector that the rules could inadvertently capture the use of charity trading subsidiaries in some cases. Revised draft legislation should be released shortly when we should get a clearer picture about the potential impact on trading subsidiaries.
Business rates review
Shortly before the Budget the government launched a wide-ranging review of national business rates in England. The review, set to report back by Budget 2016, will look at how businesses use property and how to modernise the business rates system so it better reflects changes in the value of property. If there is overarching reform, this may have an impact on the way in which business rates apply to charities.
If you would like to discuss the implications of the Budget announcements in more detail with one of our charity and not-for-profit specialists, please contact a charity specialist at your nearest location.