Charity Autumn Statement 2016 review

Philip Hammond presented what was to be his first and the last Autumn Statement on Wednesday 23rd November as he announced that going forward the budget will be in the Autumn with a Sprint Statement replacing the current one.

In this article, we summarise the key points arising from the Autumn Statement and focus on what the changes may mean for the charity sector.

In Summary (general):

• the government reaffirming the objectives to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of this Parliament.
• reduction of the Money Purchase Annual Allowance from £10,000 to £4,000.
• Insurance Premium Tax to rise from 10% to 12% from June 2017.
• tax and National Insurance advantages of salary sacrifice schemes to be removed.
• anti-avoidance measures for the VAT Flat Rate Scheme.

In addition the Chancellor announced the following pay and welfare measures:

• National Living Wage to rise from £7.20 an hour to £7.50 from April 2017.
• Universal Credit taper rate to be cut from 65% to 63% from April 2017.

In the March Budget the government announced various proposals, many of which have been subject to consultation with interested parties. Draft legislation relating to many of these areas will be published on 5 December and some of the details may change as a result.

• Repeat of the way gift aid is run which should provide an extra £60m for the charity sector by in the next five years, and £125m extra for museums and galleries.
• Government remains committed to spending 0.7% of GDP on overseas aid. However, the bleak economic outlook means that sum could fall by £80m in 2017/18 and by £210m in 2018/19
• Increase in National Living Wage from £7.20 to £7.50 an hour from April 2017
• £3m from tampon tax will be given to women’s charities by Comic Relief
• Firms who are fined breaking Libor rules will provide £102m for armed forces charities – including the Defence and National Rehabilitation Centre at Stanford Hall.

Charity sector largely overlooked?

Simon Bladen, Charity Partner at Hawsons, had this to say: “I think overall the Autumn Statement was somewhat of a non-event for charities. Although there were some interesting proposals in a Statement which largely focused on infrastructure and transport. I truly hope that devolving greater power to local authorities will at least have some positive impact on the sector.”

“Unfortunately, the increase to the National Living Wage could push up costs for some charities for no additional return. Overall charities play a very important role in building the economy and I think sooner or later we need to see a response acknowledging that fact.”

Caron Bradshaw, Chief Executive of the Charity Finance Group, said this: “We have seen tens of billions promised in infrastructure spending, business rate cuts and personal tax cuts. Most of this has been financed by greater levels of borrowing. There isn’t a lack of money, there is simply a lack of political will to support the valuable work of our sector.”

For more information

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About this Author

Simon Bladen is the partner responsible for looking after the firm’s legal clients and has worked at Hawsons throughout his career. For more information or advice on anything covered in this article, please contact Simon on slb@hawsons.co.uk or 0114 226 7141.[/author_info]