The Budget, Autumn 2018

Austerity is nearly over, according to the Chancellor’s Budget speech yesterday. He made a number of welcome announcements aimed at alleviating the administrative burden on charities, summarised below. There are also measures of more indirect interest to charities of various kinds, across the heritage and arts sectors.

The Budget included some significant spending, notably £2 billion more for departmental spending on Brexit, taking the total now committed to over £4 billion. The Chief Secretary to the Treasury will announce allocations for departments. This could have a significant impact on the charity and creative sectors, but details are yet to be announced.

Reducing administrative burdens on charities

From April 2019, the government will increase the upper limit for trading that charities can carry out without incurring tax from £5K to £8K where turnover is under £20K, and from £50K to £80K where turnover is over £200K. This should reduce the pressure for many charities to set up trading subsidiaries, and reduce the risk of unexpected tax liabilities.

The government will also allow charity shops to send Retail Gift Aid Scheme letters to donors every 3 years instead of each year when their goods raise under £20.

In addition, the government will increase the individual donation limit under the Gift Aid Small Donations Scheme (GASDS) to £30, which applies to small collections where it is impractical to obtain a GA declaration. [All under 3.16]

Business rates and charities

To provide support for small retailers, the government is cutting rate bills by one-third for retail properties with a rateable value below £51K. Charity premises are often refused the full business rate relief theoretically due to them, so this may benefit a good number – at least until the full revaluations due in 2021. [3.33]

High streets

A new initiative named ‘Our Plan for the High Street’ is to receive £675 million investment in England. This is expected to have a heritage impact as it seeks to support local areas to develop and fund plansto bring town centres back to life, including a £55 million pot for heritage-based regeneration. The aim is to restore historic high streets to boost retail and bring properties back into use as homes, offices and cultural venues. The Fund will also establish a new High Streets Taskforce to disseminate best practice amongst local leaders. [3.33 to 3.34]

Local government and social care

The chancellor announced additional funding for local government on social care of £650 million for English local authorities, and a further £84 million over the next four years to expand children’s services. This will no doubt be welcome, but charities and voluntary organisations are warning that massive problems will remain, a legacy of austerity. [5.15 to 5.18]

National Living Wage

This will rise to £8.21 from April 2019 which is welcome. However, it will impact on many charities’ resources and may make it difficult for some to deliver their services. [5.44]

Personal allowance tax threshold

This is being raised a year early. From April 2019 the personal allowance will be £12,500 (currently £11,850) with the higher rate threshold £50,000 (currently £46,350). [3.2 and 3.7]

Self-employment

 Of interest particularly to arts organisations may be the timing for the introduction of reform of off-payroll working rules (IR35), now set for April 2020. It was announced that ‘small organisations’ will be exempt. It remains to be seen how they are defined. [3.8]

Military charities and memorials

The chancellor states he can’t give a VAT exemption on the costs of memorials, but that the Treasury will make a donation of £10 million for an armed forces trust for mental health of veterans.

Associated with the military charity announcements, the Chancellor announced additional spending on village hall refurbishments and £1.7 million for school education projects associated with the Holocaust, and marking the liberation of the Bergen-Belsen concentration camp. [5.67 to 5.67]

Universal Credit

There will be an additional £1 billion package of measures over five years for Universal Credit, with work allowances increased by £1,000 per annum. The message is, ‘Universal Credit is here to stay’. [5.31 to 5.38]

Coventry, UK City of Culture

Heritage and the arts will be at the forefront as the government invests £8.5 million in Coventry’s plans for hosting the UK City of Culture in 2021. The funding will support Belgrade Theatre to refurbish the auditorium and establish a new creative talent hub. It will also invest in Coventry’s Cathedral Quarter, including the refurbishment of historic venues, the creation of additional exhibition space and a centre for music education and concerts. [4.84]

Air Ambulance Services

The government is making available £10 million of capital funding in England to support Air Ambulance Services. Traditionally, the government has not supported AAS, so this is a departure from the status quo. [5.11]

HM Treasury document can be seen at this link:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/752202/Budget_2018_red_web.pdf

Please note: This bulletin is published as a general guide to the 2018 Autumn Statement and not intended to replace specific professional advice from, for example, a solicitor or accountant. You should always refer to the official websites shown above for further information. Craigmyle consultants take no responsibility for the correctness orcompleteness of information or interpretation given here.

Austerity is nearly over, according to the Chancellor’s Budget speech yesterday. He made a number of welcome announcements aimed at alleviating the administrative burden on charities, summarised below. There are also measures of more indirect interest to charities of various kinds, across the heritage and arts sectors.

The Budget included some significant spending, notably £2 billion more for departmental spending on Brexit, taking the total now committed to over £4 billion. The Chief Secretary to the Treasury will announce allocations for departments. This could have a significant impact on the charity and creative sectors, but details are yet to be announced.

Reducing administrative burdens on charities

From April 2019, the government will increase the upper limit for trading that charities can carry out without incurring tax from £5K to £8K where turnover is under £20K, and from £50K to £80K where turnover is over £200K. This should reduce the pressure for many charities to set up trading subsidiaries, and reduce the risk of unexpected tax liabilities.

The government will also allow charity shops to send Retail Gift Aid Scheme letters to donors every 3 years instead of each year when their goods raise under £20.

In addition, the government will increase the individual donation limit under the Gift Aid Small Donations Scheme (GASDS) to £30, which applies to small collections where it is impractical to obtain a GA declaration. [All under 3.16]

Business rates and charities

To provide support for small retailers, the government is cutting rate bills by one-third for retail properties with a rateable value below £51K. Charity premises are often refused the full business rate relief theoretically due to them, so this may benefit a good number – at least until the full revaluations due in 2021. [3.33]

High streets

A new initiative named ‘Our Plan for the High Street’ is to receive £675 million investment in England. This is expected to have a heritage impact as it seeks to support local areas to develop and fund plansto bring town centres back to life, including a £55 million pot for heritage-based regeneration. The aim is to restore historic high streets to boost retail and bring properties back into use as homes, offices and cultural venues. The Fund will also establish a new High Streets Taskforce to disseminate best practice amongst local leaders. [3.33 to 3.34]

Local government and social care

The chancellor announced additional funding for local government on social care of £650 million for English local authorities, and a further £84 million over the next four years to expand children’s services. This will no doubt be welcome, but charities and voluntary organisations are warning that massive problems will remain, a legacy of austerity. [5.15 to 5.18]

National Living Wage

This will rise to £8.21 from April 2019 which is welcome. However, it will impact on many charities’ resources and may make it difficult for some to deliver their services. [5.44]

Personal allowance tax threshold

This is being raised a year early. From April 2019 the personal allowance will be £12,500 (currently £11,850) with the higher rate threshold £50,000 (currently £46,350). [3.2 and 3.7]

Self-employment

 Of interest particularly to arts organisations may be the timing for the introduction of reform of off-payroll working rules (IR35), now set for April 2020. It was announced that ‘small organisations’ will be exempt. It remains to be seen how they are defined. [3.8]

Military charities and memorials

The chancellor states he can’t give a VAT exemption on the costs of memorials, but that the Treasury will make a donation of £10 million for an armed forces trust for mental health of veterans.

Associated with the military charity announcements, the Chancellor announced additional spending on village hall refurbishments and £1.7 million for school education projects associated with the Holocaust, and marking the liberation of the Bergen-Belsen concentration camp. [5.67 to 5.67]

Universal Credit

There will be an additional £1 billion package of measures over five years for Universal Credit, with work allowances increased by £1,000 per annum. The message is, ‘Universal Credit is here to stay’. [5.31 to 5.38]

Coventry, UK City of Culture

Heritage and the arts will be at the forefront as the government invests £8.5 million in Coventry’s plans for hosting the UK City of Culture in 2021. The funding will support Belgrade Theatre to refurbish the auditorium and establish a new creative talent hub. It will also invest in Coventry’s Cathedral Quarter, including the refurbishment of historic venues, the creation of additional exhibition space and a centre for music education and concerts. [4.84]

Air Ambulance Services

The government is making available £10 million of capital funding in England to support Air Ambulance Services. Traditionally, the government has not supported AAS, so this is a departure from the status quo. [5.11]

HM Treasury document can be seen at this link:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/752202/Budget_2018_red_web.pdf

Please note: This bulletin is published as a general guide to the 2018 Autumn Statement and not intended to replace specific professional advice from, for example, a solicitor or accountant. You should always refer to the official websites shown above for further information. Craigmyle consultants take no responsibility for the correctness orcompleteness of information or interpretation given here.