On 25 November, the Chancellor delivered his latest Autumn Statement. In a year which has already seen two Budgets and a General Election, and the possible anticipated focus on gift aid, it is with some trepidation that charities awaited this year’s Autumn Statement.
In this article we summarise the key points arising from the Autumn Statement and focus specifically on what the changes may mean for the charity sector.
In summary (general):
- Tax credit cuts scrapped all together
- £12bn in targeted welfare savings to be delivered in full
- Small business rate relief to be extended for one more year
- NHS to receive £10bn more funding a year in real terms by 2020
- Basic state pension will rise by £3.35 to £119.30 a week
- New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016
- Doubling of housing budget to £2bn a year
- Capital funding of transport projects to rise by 50%
- Increased devolution with 26 new or expanded Enterprise Zones announced
- Transport (37%), environment (15%) and energy (22%) departments all face funding cuts
In summary (charity specific):
- Extra £15m funding for women’s support charities to come from ‘tampon tax’
- Increase in places on the National Citizen Service
- No change to the Big Lottery Fund
- Budget freeze for the Charity Commission
- Partial exemption to close company loan rules
- £1.5 billion uplift to the Better Care Fund by 2019-20
- Large charity employers hit by apprenticeships levy
- Gift Aid Small Donation Scheme review to begin earlier than expected
- Business rates review delayed
Autumn Statement charity impact
Overall – not too much change for charities
Simon Bladen, Charity Partner at Hawsons, noted that: “This was an Autumn Statement that delivered very little in the way of charities; it actually turned out to be a fairly uneventful affair. Much of the comment following the announcements, in the charity sector, will undoubtedly surround the Chancellor’s controversial ‘tampon tax’, which will deliver annual funding of £15m to support women’s charities.”
“There were some welcome announcements though, including the expansion of the National Citizenship Service, the extension of the Better Care Fund and a continued commitment to the Big Lottery Fund. The Chancellor also confirmed that the Charity Commission’s funding is to remain at its current level until 2020/21. That is still an effective funding cut in real terms, but it is not as severe as some in the sector had feared. Charities play a critical role in our society so any funding cut is unwelcome news.”
“There was considerable anticipation for a stronger focus on gift aid, which didn’t turn out to be the case. The Chancellor did however confirm that the Gift Aid Small Donations Scheme review would begin in December 2015, much earlier than expected. Although this initial review is likely to be only the first stage in a long review process, it is certainly a positive development for the smaller charity community.”
Partial exemption to close company loan rules
Simon added: “The exemption from Section 455 for loans to charities that use the funds for charitable purposes (e.g. where charity has a trading subsidiary) brings good news to the sector. This is a long overdue announcement and will provide welcome relief to charitable organisations that have been caught unawares by this tax.”
This measure comes into effect immediately and will only be applied from 25 November 2015.
The government has now released a policy document saying that the measure “exempts loans or advances made by close companies to trustees of charities for charitable purposes from the tax charge applied under the loans to participators rules.”
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