The Mini-Budget statement from the new Chancellor, Kwasi Kwarteng, came as the UK continues to face considerable pressures from high inflation and substantial increases in the cost of living. Mr Kwarteng outlined a series of measures he believes will boost economic growth.
Titled a Growth Plan, there were some substantial announcements, with significant associated costs on tax cuts and energy support.
The Growth Plan makes growth the government’s central economic mission, setting a target of reaching a 2.5% trend rate.
On energy, the government has already announced an Energy Price Guarantee (with the average household paying no more than £2,500 per year for 2 years from October 2022). A six-month Energy Relief Scheme will support businesses and other non-domestic energy users, including charities and public sector organisations.
There are a number of significant changes on tax.
The Growth Plan cuts National Insurance contributions from November (reversing the 1.25% rise) and cancels the Health and Social Care Levy and next year’s planned rise in Corporation Tax, keeping it at a rate of 19%.
The Growth Plan brings forward the planned 1p cut to the basic rate of income tax (to 19p) to April 2023. It abolishes the additional rate of income tax (45p for top earners). Charities will need to review the implications of this on the tax-effective giving plans of their higher-earning donors.
Alongside these income tax changes, the government recognises the importance of Gift Aid to charities and is maintaining Gift Aid at the current level until April 2027.
From 23rd September, the threshold from which house-buyers begin to pay Stamp Duty Land Tax will be doubled to £250,000. First-time buyers will pay no stamp duty on homes worth £450,000, up from £300,000 and the maximum value of a property on which first-time buyers’ relief can be claimed will also increase from £500,000 to £625,000.
Addressing the statement in detail, key announcements included:
Energy Bill Relief Scheme – The new six-month Energy Bill Relief Scheme for businesses and other non-domestic energy users, including charities and public sector organisations (such as schools and hospitals), providing them with a discount on energy prices. (Paragraph 2.6). Further details on the scheme can be found here. The government also announced £400 support for households through the Energy Bills Support Scheme. (paragraph 2.3)
Income Tax – The Government will bring forward the 1 percentage point cut to the basic rate of income tax to April 2023, 12 months earlier than planned. This will apply to the basic rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland; the savings basic rate which applies to savings income for taxpayers across the UK; and the default basic rate which applies to non-savings and non-dividend income of any taxpayer that is not subject to either the main rates or the Scottish rates of income tax. (Paragraph 3.2.1)
The additional rate of income tax will also be removed from April 2023. This will apply to the additional rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland. The additional rate for savings, dividends and the default rates will also be removed from April 2023, and this change will apply UK-wide. Where rates are devolved in Scotland the Scottish Government will receive funding through the agreed fiscal framework to allocate as they see fit. (Paragraph 3.2.2)
As the additional rate of income tax will be removed current additional rate taxpayers will also benefit from the Personal Savings Allowance of £500 for higher rate taxpayers. (Paragraph 4.2.7). A HMRC factsheet on income tax is available.
Gift Aid transition period – A four-year transition period for Gift Aid relief will apply, to maintain the income tax basic rate relief at 20% until April 2027. This means in practice that charities and CASCs will continue to claim Gift Aid and GASDS at 25p for every £1 of eligible donation made between 6th April 2023 and 5th April 2027. (Paragraph 4.2.7)
Relief at Source transitional period – There will also be one-year transitional period for Relief at Source (RAS) pension schemes to permit them to continue to claim tax relief at 20%. (Paragraph 4.2.7).
National Insurance increase reversed – The 1.25% National Insurance increase introduced in April 2022 is to be reversed from 6 November 2022. (Announced on 22nd September). See HMRC factsheet for further details.
Health and Social Care Levy cancelled – The Health and Social Care Levy due to be introduced in April 2023 will be cancelled through new legislation (paragraph 3.20)
Tax Simplification – The Government has announced that instead of having a separate arms-length body oversee simplification, it will embed tax simplification into the institutions of government. It will therefore abolish the Office of Tax Simplification and set a mandate to the Treasury and HMRC to focus on simplifying the tax code. (paragraph 3.43)
Corporation tax rise cancelled -The government has committed to cancel the increase in the main rate of Corporation Tax to 25% that was due to take effect from April 2023, keeping the rate at 19% (paragraph 3.9).
Repealing off-payroll working reforms – The 2017 and 2021 reforms to the offpayroll working rules (also known as IR35) will be repealed from 6 April 2023. From this date,
workers across the UK providing their services via an intermediary, such as a personal service company, will once again be responsible for determining their employment status and paying the appropriate amount of tax and NICs.(paragraph 4.20)
Stamp Duty Land Tax thresholds increased – From 23 September 2022, the government will increase the threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential properties in England and Northern Ireland from £125,000 to £250,000. The government will also increase the relief that first-time buyers can receive. From 23 September 2022, the threshold at which first time buyers begin to pay residential SDLT will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyers relief can be claimed will also increase, from £500,000 to £625,000. (paragraph 4.24)
New Investment Zones – The Government will work with the devolved administrations and local partners to introduce Investment Zones across the UK. Investment Zones aim to drive growth and unlock housing. Areas with Investment Zones will benefit from tax incentives (including certain business rates reliefs), planning liberalisation, and wider support for the local economy. (paragraph 4.1.2)
Changes to Universal Credit – The government is increasing the Administrative Earnings Threshold to 15 hours a week at National Living Wage for an individual claimant (and 24 hours a week for couples) from January 2023. (paragraph 4.30) The government will be strengthening the sanctions regime to set clear work expectations – including applying for jobs, attending interviews or increasing the hours– in return for receiving Universal Credit. (paragraph 4.31)
HM Treasury document can be seen at this link:
https://www.gov.uk/government/publications/the-growth-plan-2022-documents
Please note: This bulletin is published as a general guide 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.
Yesterday’s spring economic and fiscal forecast came as the UK faces rising inflation which has been accelerated due to higher than usual uncertainty, following the invasion of Ukraine, and higher than expected global energy and goods prices that have already led to an increase in the cost of living in the UK.
Slightly better than expected UK economic recovery in 2021 (7.5% GDP growth) gave the Chancellor a little leeway to provide assistance. The resulting tax plan – with its focus on helping families with the cost of living, creating the conditions for private sector led growth, and sharing the proceeds of growth fairly with working people – was claimed as the biggest net cut to personal taxes in 25 years.
With the reduction in the basic rate of income tax due from April 2024, charities will be pleased to note the three-year transition period for Gift Aid relief to maintain the income tax basic rate relief at 20% until April 2027.
Despite some calls for a windfall tax, there was no further help with steeply rising energy costs, with the statement claiming that most households will be protected until the autumn by the OFGEM energy price cap.
Although the rising cost of living was a frequent reference, many of the measures focused on workers and homeowners, with limited assistance for those out of work, whether due to job loss, health or disability or retirement. The Resolution Foundation claims more than 1.3 million people will not be able to afford basic necessities next year.
Addressing the statement in detail, the announcements included:
Increasing National Insurance thresholds – The annual National Insurance Primary Threshold and Lower Profits Limit, for employees and the self-employed respectively, will increase from £9,880 to £12,570 from July 2022. (Paragraph 3.6) This aligns NI thresholds with the income tax personal allowance (and these thresholds will remain aligned). (Paragraph 2.11)
Reducing Class 2 NICs payments for low earners – From April, self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will not pay class 2 NICs, meaning lower-earning self-employed people can keep more of what they earn while continuing to build up National Insurance credits. Over the year as a whole, the Lower Profits Limit, the threshold below which self-employed people do not pay National Insurance, is equivalent to an annualised threshold of £9,880 between April to June, and £12,570 from July. (Paragraph 3.7)
Increasing the Employment Allowance – The Employment Allowance will increase from April 2022, meaning eligible employers will be able to reduce their employer NIC bills by up to £5,000 per year – a tax cut worth up to £1,000 per employer. As a result, businesses will be able to employ four full-time employees on the National Living Wage without paying any employer NICs. This measure will benefit around 495,000 businesses, including around 50,000 businesses which will be taken out of paying NICs and the Health and Social Care Levy entirely. In total, this means that from April 2022, up to 670,000 businesses will not pay NICs or the Health and Social Care Levy due to the Employment Allowance. (Paragraph 3.8)
Reduction in basic rate of income tax – the basic rate of income tax will be cut to 19% from April 2024. This is a tax cut of over £5 billion a year and represents the first cut in the basic rate of income tax in 16 years. This will apply to the basic rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland; the savings basic rate which applies to savings income for taxpayers across the UK; and the default basic rate which applies to a very limited category of income taxpayers made up primarily of trustees and non-residents.
The change will be implemented in a future Finance Bill. A three-year transition period for Gift Aid relief will apply, to maintain the income tax basic rate relief at 20% until April 2027. The reduction in the basic rate for non-savings-non-dividend income will not apply for Scottish taxpayers because the power to set these rates is devolved to the Scottish Government. Under the agreed Fiscal Framework, the Scottish Government will receive additional funding, worth around £350 million in 2024-25. It is for the Scottish Government to use this additional funding as they choose, including reductions in income tax or other taxes, or increased spending. (Paragraph 3.9)
Temporary cut to fuel duty – The government will cut the duty on petrol and diesel by 5p per litre for 12 months. This will take effect from 6pm on 23 March on a UK-wide basis. Where practical, a proportionate cut will also apply to fuel duty rates which are lower than the main rates for petrol and diesel, including red diesel. (Paragraph 3.10)
Extending the Household Support Fund – To help households with the cost of essentials such as food, clothing and utilities, the government is providing an additional £500 million for the Household Support Fund from April, on top of the £500 million already provided since October 2021, bringing total funding to £1 billion. In England, the Government says that local authorities are best placed to help those in their areas who need it most. They will receive an additional £421 million, whilst the devolved administrations will receive an additional £79 million in funding through the Barnett Formula. (Paragraph 3.11)
VAT relief for energy saving materials (ESMs) – The Government will reverse a Court of Justice of the European Union ruling that it says restricted the application of VAT relief on the installation of ESMs. This will mean wind and water turbines will be added to the list of ESMs and the complex eligibility conditions will be removed. The Government will also increase the relief further by introducing a time-limited zero rate for the installation of ESMs. The changes will take effect from April 2022. The Northern Ireland Executive will receive a Barnett share of the value of this relief until it can be introduced UK-wide. (Paragraph 3.12)
Green reliefs for Business Rates – At Autumn Budget 2021 the government announced the introduction (in England) of targeted business rate exemptions from 1 April 2023 until 31 March 2035 for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill, to support the decarbonisation of non-domestic buildings. The government is bringing forward the implementation of these measures and is announcing that they will now take effect from April 2022. (Paragraph 3.13)
R&D tax relief reform – Following consultation with stakeholders the Government has confirmed that from April 2023, all cloud computing costs associated with R&D, including storage, will qualify for relief. The government says it remains committed to refocus support towards innovation in the UK, ensuring that the UK more effectively captures the benefits of R&D funded by the reliefs. The Government recognises that there are some cases where it is necessary for the R&D to take place overseas. To support the growing volume of R&D underpinned by mathematical advances, the definition of R&D for tax reliefs will be expanded by clarifying that pure mathematics is a qualifying cost. (Paragraph 3.14)
Additional compliance resource for HMRC – The Government is investing £161 million over the next five years to increase compliance and debt management capacity in HMRC. This investment is forecast to bring in more than £3 billion of additional tax revenues over the next five years, by funding additional HMRC staff to provide greater support to taxpayers seeking to pay off accrued tax debts, and to tackle the most complex tax risks, ensuring large and mid-sized businesses pay the tax they owe. (Paragraph 3.15)
Tackling Fraud – The Government is providing £48.8 million of funding over three years to support the creation of a new Public Sector Fraud Authority and enhance counter-fraud work across the British Business Bank and the National Intelligence Service. The investment enables government and enforcement agencies to step up their efforts to reduce fraud and error, bring fraudsters to justice, and will recover millions of pounds. (Paragraph 3.18)
Second Round of Levelling Up Fund – The Government is launching the second round of the Levelling Up Fund and publishes a refreshed Prospectus, inviting bids to come forward from all eligible organisations across the UK. This Fund provides £4.8 billion for local infrastructure projects, with £1.7 billion already allocated to 105 successful projects from the first round. (Paragraph 3.19)
Additional funds for Changing Places Fund – The government previously made £30 million available to local authorities in England to install life-enhancing Changing Places toilets in existing buildings. The Spring Statement is allocating £25.3 million of the Fund to install over 500 life-enhancing Changing Places toilets, in public places and tourist attractions where users want them the most. This will dramatically increase accessibility for thousands of severely disabled people who need specialised facilities. An additional £6.5 million will be allocated to areas where there is little or no provision. (Paragraph 3.20)
Announcement of Tax Plan which contains three key priorities: helping families with the cost of living; cuts and reform of business taxes, to create a new culture of enterprise and the conditions for private sector-led growth; sharing the proceeds of higher growth fairly with working people, through further tax cuts. The government also intends to make the tax system simpler, fairer and more efficient through this plan. (Paragraph 4.5)
HM Treasury document can be seen at this link:
https://www.gov.uk/government/publications/spring-statement-2022-documents
Please note: This bulletin is published as a general guide to the 2022 Spring 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 or completeness of information or interpretation given here.
In March 2021, a team of three Craigmyle Consultants was appointed by Pembrokeshire County Council to work with them and other partners in developing a major bid application within Round 1 of the UK Government’s new Levelling Up Fund. The bid focused on the economic regeneration of the historic county town of Haverfordwest via imaginative investment in its heritage and cultural assets.
We were thrilled to learn this week in the Chancellor of the Exchequer’s autumn Budget announcement that this application has been completely successful in all its aspects, and that an award of £17.7m has been made to Pembrokeshire County Council in support of this worthy project. This grant represents the second largest Levelling Up Fund award made within Wales.
The £17.7m provided towards the regeneration of Haverfordwest will support ongoing improvement work at the town centre site of Haverfordwest’s 13th century castle, which has fallen into disuse and increasing dilapidation. The investment will fund the creation of a vibrant outdoor performance space, the renovation of the Victorian gaol within the castle walls in preparation for it housing a flagship visitor attraction, and the creation of a lovely castle walls perimeter walk with associated green infrastructure enhancements.
Additionally, the funding also supports the enhancement of the town centre through the creation of an architecturally stunning ‘signature bridge’ over the River Cleddau, linking key arrival points into the town to a vibrant quayside cultural quarter area, and creating much improved access from the town centre up to the castle’s visitor attractions.
The scheme sits within the Council’s wider regeneration strategy for Pembrokeshire. Cllr Paul Miller, Cabinet Member with responsibility for Economic Development, responded to the fantastic news of the award saying: “My thanks go to all those involved in putting together the formal bids. It’s a great example this, of working together, irrespective of political boundaries, for the benefit of Pembrokeshire… This is a really significant milestone on our regeneration journey.”
Dr Steven Jones, Director of Community Resources at Pembrokeshire County Council added: “The core investment in local landmarks and facilities contributes significantly to the place making, economic development, regeneration and transformation of Pembrokeshire. New town centre facilities are fundamental to increasing footfall in Pembrokeshire towns and promoting community confidence, new growth and prosperity in a post-Covid environment.”
Craigmyle consultant, Dr Joel Burden, said “Our dedicated team of Alison Giles, Siân Newton and I couldn’t be more delighted to hear this wonderful news from the UK Government. The bid was written on a very tight timetable, and being a Round 1 application, there was no existing template for success for us to follow. Drawing on Craigmyle’s long experience in fundraising and working closely with a fantastic set of expert partners at the Council and within the other project consultancy teams, we were able to craft a strong bid for a really worthwhile project. It is gratifying to see this great team effort bear fruit with an award that is going to be transformational for Haverfordwest. We are now looking forward to seeing the project develop on the ground over the next few years.”
Picture credit: © Wici Rhuthun 1
Yesterday, Rishi Sunak announced a budget to extend economic support and promote recovery, in the face of the COVID-19 pandemic, whilst warning of the need to repair the public finances.
There were items that are likely to be of particular interest to cultural organisations, including museums and heritage bodies, and to charities with staff and business premises. There was also a set of more general provisions, such as alterations to corporation tax, that all charities need to note. There was useful confirmation of the position with Inheritance Tax and Social Investment Tax Relief, and development of support for regions, especially as the withdrawal of EU funding takes effect.
Disappointingly, what wasn’t included in the budget was any expansion of the £750m charity support package. There was no temporary increase in Gift Aid, despite calls from the sector. There was also little investment in a green recovery.
Looking at the announcements in detail, firstly there was a raft of measures broadly aimed at protecting jobs and livelihoods. These included:
The Coronavirus Job Retention Scheme was extended by 5 months to September 2021 across the UK, providing employees with 80% of their current salary for hours not worked. Employer contributions will be required from July, initially at 10%, then at 20% from August. (Paragraph 2.14)
The UK wide, Self-Employment Income Support scheme was also extended to September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time. A grant can be claimed from late April to cover February-April (up to a cap of £7,500, worth 80% of 3 months average trading profits); a final grant can be claimed from late July, covering May-Sept, with the grant determined by a turnover test. (Paragraph 2.15 and 2.16)
Income tax exemptions for COVID-19 tests and home office expenses -extended to the 2021-22 tax year. (Paragraph 2.17)
A number of welfare announcements were made (see paragraphs 2.18-2.24) including a six-month extension of the temporary £20 a week increase in Universal Credit allowance and a relaxation in working tax credit hours.
Investments in training and apprenticeships (see paragraphs 2.29-2.31).
Assistance in the form of the Recovery Loan Scheme, a new guarantee for lenders of 80% on eligible loans between £25k and £10m (paragraph 2.42) and Restart Grants offering funding in England for non-essential retail businesses, hospitality, accommodation, leisure, personal care and gym businesses. (Paragraph 2.43)
VAT reduction for the UK’s tourism and hospitality sector – the government will extend the temporary reduced rate of 5% VAT for goods and services supplied by the tourism and hospitality sector until 30 September 2021. A 12.5% rate will apply for the subsequent six months until 31 March 2022. (Paragraph 2.46)
Business rates – the government will continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. (Paragraph 2.47)
Contactless payment card limit – single contactless payments up to £100, and cumulative contactless payments up to £300, will be permitted without requiring the use of chip and pin. (Paragraph 2.54)
The Chancellor announced funding for a number of sectors:
- £475k funding for Armed Forces charities to support digital and data strategies (Paragraph 2.37)
- £10 million to support veterans’ mental health needs across the UK (Paragraph 2.38)
- £19 million to tackle domestic abuse in England and Wales, with funding for a network of ‘Respite Rooms’ to support homeless women and a programme to prevent reoffending. (Paragraph 2.39)
- The Zoo Animals Fund will be extended another 3 months, to end of June 2021.
- £300m extension to the Culture Recovery Fund to support key national and local cultural organisations. (Paragraph 2.56)
- £90 million funding to support government-sponsored national museums in England due to the financial impact of Covid-19. (Paragraph 2.57)
- £300 million for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to stadia. (Paragraph 2.59)
Tax allowances and rates
Inheritance tax nil-rate bands will remain at existing levels until April 2026. The nil-rate band will continue at £325,000; the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability. (Paragraph 2.73)
Income Tax and NICs – income tax Personal Allowance and income tax higher rate threshold will rise as planned (to £12,750 and £50,270 respectively) from April 2021 and will remain at this level until April 2026. (Paragraph 2.74) The same will apply to NICs thresholds. (Paragraph 2.75)
Corporation tax – to balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of corporation tax will increase from April 2023 to 25% on profits over £250,000. The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate. The Diverted Profits Tax rate will rise to 31% from April 2023 so that it remains an effective deterrent against diverting profits out of the UK. (Paragraph 2.81)
VAT registration threshold: will remain at £85,000 until 2024. (Paragraph 2.91)
Review of tax administration for large businesses – discussions will be initiated with businesses, advisers and stakeholders over the coming months considering improvements as HMRC continues to progress its 10-year Tax Administration Strategy and wider Tax Administration Framework Review. (Paragraph 2.92)
Targeted funds were announced, to spread invest across every part of the UK including:
- £4.8m Levelling Up Fund prospectus launch (investing in infrastructure that improves everyday life across the UK, including town centre and high street regeneration, local transport projects, and cultural and heritage assets.) Priority places have been identified based on an index of local need. See paragraph 2.119.
- £220m UK Community Renewal Fund prospectus launch to support UK communities in 2021-22 to pilot programmes/new approaches as the government moves away from the EU Structural Funds model and towards the UK Shared Prosperity Fund. Funding will be allocated competitively. Priority places have been identified based on an index of local need. See paragraph 2.123
- £150m Community Ownership Fund – from the summer, community groups will be able to bid for up to £250,000 matched funding to help them to buy local assets (like pubs, sports clubs, theatres and post office buildings) to run as community-owned businesses. In exceptional cases up to £1 million of matched funding will be available to help establish a community-owned sports club or buy a sports ground at risk of loss from the community (Paragraph 2.124)
Social Investment Tax Relief extension – the government will continue to support social enterprises in the UK that are seeking growth investment by extending the scheme to April 2023. (Paragraph 2.148)
R&D tax reliefs – the government will carry out a review of R&D tax reliefs, with a consultation published alongside the Budget. (Paragraph 2.149)
HM Treasury document can be seen at this link:
https://www.gov.uk/government/publications/budget-2021-documents
Please note: This bulletin is published as a general guide to the 2021 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.
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:
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.
The Budget, Autumn 2017
Perhaps it would have been fair to anticipate that Chancellor Philip Hammond would not have a great deal of time or energy to devote to the concerns of the charity sector. Nonetheless, there has been some movement on the vexed issue of the complexity of Gift Aid, especially relating to donor benefits, and an announcement of additional funding to tackle homelessness.
Gift Aid
As previously promised, a simplification of donor benefit rules has been formulated. The current three thresholds are to be replaced from April 6th 2019, with just two.
- The benefit threshold for the first £100 of the donation will remain at 25% of the amount of the donation.
- For larger donations, charities will be able to offer an additional benefit to donors up to 5% of the amount of the donation that exceeds £100.
The total value of the benefit that a donor will be able to receive remains at £2,500. Four extra statutory concessions that currently operate in relation to the donor benefit rules will also be brought into legislation.
Social media and other comment from the charity and finance sector is mixed. A summary of responses to a consultation on simplifying the Gift Aid donor benefit rules will be published on December 1st. (para 3.20)
Personal Tax Allowances
The Budget announces that in 2018-19 the Personal Tax Allowance will increase to £11,850. Perhaps whilst contacting donors about GDPR, charities might want to consider taking the opportunity to flag this increase up to donors to check the eligibility of their gifts. The Higher Rate Tax Threshold will rise to £46,350. (para 3.5)
Homelessness
As part of its commitment to halve rough sleeping by 2022, and to eliminate it by 2027, the government is tasking the Homelessness Reduction Taskforce with development of a cross-government strategy to tackle the problem (para 5.33). It is to be hoped this will recognise and use the expertise and work many charities have put into this growing crisis.
Cultural Development
To support the role culture can play in regeneration and local growth, the government will provide £2 million funding to the Department for Digital, Culture, Media and Sport for place-based cultural development. (para 4.83)
Landfill Communities Fund
The government will set the Landfill Communities Fund for 2018-19 at £33.9 million, in accordance with the announcement at Spring Budget 2017 that the cap on contributions by landfill operators would be set at 5.3%. (para 3.52)
VAT
An Accident Rescue Charities Grant Scheme will be established to meet the cost of normally irrecoverable VAT. (para 3.63)
Mental Health
In December, a green paper will be published setting out the government’s plans to transform mental health services for children and young people. (para 6.10)
Land Value Uplift
In this year’s Housing White Paper, the government committed to respond to the CIL Review. DCLG will launch a consultation with detailed proposals on the following measures: removing restriction of Section 106 pooling towards a single piece of infrastructure where the local authority has adopted CIL, in certain circumstances such as where the authority is in a low viability area or where significant development is planned on several large strategic sites. This will avoid the unnecessary complexity that pooling restrictions can generate. (para 5.14)
Credit Union Membership
Credit Unions will be allowed to increase their numbers of members from the current limit of 2 million to 3 million. This is intended to increase access to reputable sources of credit for those who may not qualify for mainstream banking services (para 4.39)
LIBOR
The last tranche of the LIBOR Charity Funding Scheme was also announced, with a further £36 million of banking fines to be shared out over the next 3 years among armed forces, emergency services and other charities. (para 4.40)
There will be widespread relief amongst charities and others that there are measures to address the crisis around Universal Credit. (paras 6.13 to 6.16)
All paragraph references above relate to the Budget Statement
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/661480/autumn_budget_2017_web.pdf
Please note: This bulletin is published as a general guide to the 2017 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 or completeness of information or interpretation given here.
