The Budget, Spring 2020

Presenting his first budget yesterday, Rishi Sunak, the new Chancellor of the Exchequer, announced a £30bn stimulus package to help the economy get through the coronavirus outbreak. Measures include:

  • a £5bn emergency response fund to support the NHS;
  • statutory sick pay (SSP) from the first day of absence for those advised to self-isolate or caring for someone who is in self-isolation;
  • support through the welfare system for those who cannot claim SSP; through a “new style” Employment and Support Allowance; advance payments on Universal Credit, without having to attend a job centre, for those directly affected by Covid-19; temporary relaxation of the minimum income floor requirements for Universal Credit, for those affected by the virus;
  • a £500m hardship fund “to support economically vulnerable people and households in their local area. The government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes, or through complementary reliefs.”

All these reliefs depend on the person affected following “Government Advice.” Further detail can be found in paragraphs 1.93-1.97 of the budget statement.

There was however no recognition of the potential financial impact on charities which may have to curtail fundraising events or face to face collections or face increased demand from vulnerable clients.

The NCVO has provided helpful guidance for charities in relation to Covid-19 here: https://www.ncvo.org.uk/practical-support/information/coronavirus

Further significant spending was announced with £175m on public infrastructure.

The roll out of Universal Credit has been pushed back to September 2024, along with a number of changes, including:

  • extending the time to pay back advance payments to two years;
  • reducing the level of debt that can be collected from awards – from 30 to 25 per cent;
  • cutting the longest sanction, which is three years;
  • delaying surplus earnings threshold reduction by one year;
  • additional support for claimants transferring to pension credit;
  • changes to severe disability premium regulations.

A range of other measures, including ending the benefit freeze and increasing working age benefits by 1.7% from April 2020, were announced to support to the most vulnerable – see paragraphs 1.180 -1.88.

Disappointingly, there was very little direct mention of charities in the budget at a time when they face financial uncertainty but are being asked to meet growing needs. The work of civil society, and its potential contribution to the government’s aims to ‘level up’ society, appear to have been only scantily recognised.

The Chancellor did, however, announce funding for veterans’, homelessness and environmental projects.

Armed Forces Covenant Fund Trust

The government will provide a £10 million increase in 2020-21 to the Armed Forces Covenant Fund Trust to fund activities that support veterans with mental health needs.

Funding for homelessness

£650m to help rough sleepers into permanent accommodation, with a new stamp duty surcharge for non-UK residents to help fund this.

Nature for climate fund

The government will provide £640m to protect natural habitats, including 30,000 hectares of new trees.

Other announcements, which will may be of interest to charities of various kinds, across different sectors, are summarised below.

Reading tax abolished

From December VAT will be abolished on digital publications which is welcome news since charities use such publications to tell the public and supporters about their work. The government will be consulting on the details of the legislation ahead of its implementation.

Abolition of tampon tax

5% VAT on women’s sanitary products to be abolished from January 2021. Campaigners have welcomed the tax’s removal, but have urged the government to continue to fund charities working with vulnerable women and girls once it has been abolished.

Retail Discount

To support small businesses affected by the coronavirus the government is increasing the Business Rates Retail Discount further to 100% (up from 50%) for 2020-21. This will be expanded to the leisure and hospitality sectors. The extension of retail discount should help charity shops. At present, the relief is subject to State Aid de minimis thresholds however, so an increase in relief could lead to some charities to deplete their allowance.

Review of business rates

A fundamental review of business rates (in England) will take place later this year; some charities may benefit from support to be provided to reduce the overall burden on businesses.

Increased National Insurance threshold

From April, the thresholds at which employees and the self-employed start paying National Insurance contributions will rise from £8,632 to £9,500 – saving employees just over £100 a year

Employment Allowance

From April 2020, the Employment Allowance will be increased from £3,000 to £4,000, which will help many charities but is likely to exclude larger charity employers, only applying to employers with secondary Class 1 NIC liabilities of less than £100,000 in the previous tax year.

Capital Gains Tax Reduction in the Entrepreneurs’ Relief lifetime limit

From March, the lifetime limit on gains eligible for Entrepreneurs’ Relief (which offers a reduced 10% rate of Capital Gains Tax on qualifying disposals) will be reduced from £10 million to £1 million.

Corporation tax rate

The current tax rate of 19% will be retained.

UK Shared Prosperity Fund

Replacing the EU structural funds, the UKSPF will match domestic priorities, with a focus on investing in people. At a minimum, it will match current levels of funding. Further details will be announced in the Autumn Spending Review.

HM Treasury document can be seen at this link:

https://www.gov.uk/government/publications/budget-2020-documents/budget-2020

Please note: This bulletin is published as a general guide to the 2020 Spring Budget 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 or completeness of information or interpretation given here.

Presenting his first budget yesterday, Rishi Sunak, the new Chancellor of the Exchequer, announced a £30bn stimulus package to help the economy get through the coronavirus outbreak. Measures include:

  • a £5bn emergency response fund to support the NHS;
  • statutory sick pay (SSP) from the first day of absence for those advised to self-isolate or caring for someone who is in self-isolation;
  • support through the welfare system for those who cannot claim SSP; through a “new style” Employment and Support Allowance; advance payments on Universal Credit, without having to attend a job centre, for those directly affected by Covid-19; temporary relaxation of the minimum income floor requirements for Universal Credit, for those affected by the virus;
  • a £500m hardship fund “to support economically vulnerable people and households in their local area. The government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes, or through complementary reliefs.”

All these reliefs depend on the person affected following “Government Advice.” Further detail can be found in paragraphs 1.93-1.97 of the budget statement.

There was however no recognition of the potential financial impact on charities which may have to curtail fundraising events or face to face collections or face increased demand from vulnerable clients.

The NCVO has provided helpful guidance for charities in relation to Covid-19 here: https://www.ncvo.org.uk/practical-support/information/coronavirus

Further significant spending was announced with £175m on public infrastructure.

The roll out of Universal Credit has been pushed back to September 2024, along with a number of changes, including:

  • extending the time to pay back advance payments to two years;
  • reducing the level of debt that can be collected from awards – from 30 to 25 per cent;
  • cutting the longest sanction, which is three years;
  • delaying surplus earnings threshold reduction by one year;
  • additional support for claimants transferring to pension credit;
  • changes to severe disability premium regulations.

A range of other measures, including ending the benefit freeze and increasing working age benefits by 1.7% from April 2020, were announced to support to the most vulnerable – see paragraphs 1.180 -1.88.

Disappointingly, there was very little direct mention of charities in the budget at a time when they face financial uncertainty but are being asked to meet growing needs. The work of civil society, and its potential contribution to the government’s aims to ‘level up’ society, appear to have been only scantily recognised.

The Chancellor did, however, announce funding for veterans’, homelessness and environmental projects.

Armed Forces Covenant Fund Trust

The government will provide a £10 million increase in 2020-21 to the Armed Forces Covenant Fund Trust to fund activities that support veterans with mental health needs.

Funding for homelessness

£650m to help rough sleepers into permanent accommodation, with a new stamp duty surcharge for non-UK residents to help fund this.

Nature for climate fund

The government will provide £640m to protect natural habitats, including 30,000 hectares of new trees.

Other announcements, which will may be of interest to charities of various kinds, across different sectors, are summarised below.

Reading tax abolished

From December VAT will be abolished on digital publications which is welcome news since charities use such publications to tell the public and supporters about their work. The government will be consulting on the details of the legislation ahead of its implementation.

Abolition of tampon tax

5% VAT on women’s sanitary products to be abolished from January 2021. Campaigners have welcomed the tax’s removal, but have urged the government to continue to fund charities working with vulnerable women and girls once it has been abolished.

Retail Discount

To support small businesses affected by the coronavirus the government is increasing the Business Rates Retail Discount further to 100% (up from 50%) for 2020-21. This will be expanded to the leisure and hospitality sectors. The extension of retail discount should help charity shops. At present, the relief is subject to State Aid de minimis thresholds however, so an increase in relief could lead to some charities to deplete their allowance.

Review of business rates

A fundamental review of business rates (in England) will take place later this year; some charities may benefit from support to be provided to reduce the overall burden on businesses.

Increased National Insurance threshold

From April, the thresholds at which employees and the self-employed start paying National Insurance contributions will rise from £8,632 to £9,500 – saving employees just over £100 a year

Employment Allowance

From April 2020, the Employment Allowance will be increased from £3,000 to £4,000, which will help many charities but is likely to exclude larger charity employers, only applying to employers with secondary Class 1 NIC liabilities of less than £100,000 in the previous tax year.

Capital Gains Tax Reduction in the Entrepreneurs’ Relief lifetime limit

From March, the lifetime limit on gains eligible for Entrepreneurs’ Relief (which offers a reduced 10% rate of Capital Gains Tax on qualifying disposals) will be reduced from £10 million to £1 million.

Corporation tax rate

The current tax rate of 19% will be retained.

UK Shared Prosperity Fund

Replacing the EU structural funds, the UKSPF will match domestic priorities, with a focus on investing in people. At a minimum, it will match current levels of funding. Further details will be announced in the Autumn Spending Review.

HM Treasury document can be seen at this link:

https://www.gov.uk/government/publications/budget-2020-documents/budget-2020

Please note: This bulletin is published as a general guide to the 2020 Spring Budget 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 or completeness of information or interpretation given here.