Prior to the Budget, various bodies representing the not for profit sector set out their wish lists of what they wanted Philip Hammond to address in the Budget. Post Budget, what were their reactions? ‘Tinkers around the edges’, ‘A tepid budget’, ‘Next few years will be tough’ to quote but a few. Comments which sum up the position rather well for the majority.
So what has been proposed?
VAT and Charities is an area crying out for simplification and reform. Most charities are not VAT registered (although more may now find that they fall foul of the VAT registration threshold since it is has now been frozen at £85,000). As a result, VAT increases the cost base of these organisations, with an estimated £1.5bn lost to irrecoverable VAT each year. Eliminating this cost would have a significant impact on the sector. VAT rebate schemes already exist for specific charities, such as hospices and search and rescue charities. The Chancellor improved the position further, although sadly not sector wide, when he announced a new Accident Rescue Charities Grant Scheme, although there is little detail on how this will operate as yet.
The Budget documents announced that an additional £36m of funding from Libor fines will be committed to the sector over 3 years, as the scheme itself comes to an end. However, again not sector wide, as the grants from this funding are directed towards the armed forces and emergency services charities.
And finally, there are changes to be made to the gift aid donor benefit rules. There are restrictions placed on the benefits that donors can receive as a result of their donations whilst enabling the charity to still reclaim gift aid. The Chancellor intends to simplify the criteria from April 2019.
But sadly, there was no announcement of support for the social care sector, where a number of charities are facing significant backdated pay demands arising from the application of the national minimum wage to overnight sleep-in workers.