Today the Chancellor announced that his budget would be for makers, doers and savers. Given the voluntary sector contains all three you would presume that there would be something for everyone. Is this how it turned out?
The budget story continued to be dominated by the Chancellor’s efforts to cut public spending in order to reduce the deficit. As these slides from the Institute for Fiscal Studies show, the Chancellor is only 46% of the way through his planned public spending cuts. So it is important not to get distracted by the tweaks and give-aways that were announced in the Budget.
There were few surprises for the voluntary sector, with many of the biggest changes that will affect the sector being recycled from the last budget such as a £2,000 Employment Allowance for charities that employ staff and the abolition of employer’s National Insurance contributions for under 21s.
However here are a few things to take away from Budget 2014:
1. Changes to digital Gift Aid
Following consultation last year on the future of digital Gift Aid the government has confirmed that it will be introducing legislation to increase the role of non-charity intermediaries (such as online giving platforms and text donation operators). These changes will be implemented in next year’s Finance Bill and there will be continued opportunity for the sector to contribute to these discussions.
2. More support for small charities to claim tax reliefs
In our letter to the Treasury ahead of the Budget, NCVO and other voluntary sector organisations called on the Government to do more to support smaller charities. So it was good to see the Government announcing that a new small charities outreach team would be set up in HMRC. Many reliefs, for example Gift Aid Small Donations Scheme, are quite complicated for smaller charities to understand and this puts them off claiming for reliefs that they are entitled to. More support for smaller charities should hopefully increase the amount that they receive from these charitable tax reliefs.
3. Social Investment Tax Relief (SITR)
The Chancellor confirmed that the rate of relief for SITR would be 30% – in line with the Enterprise Investment Scheme. Unfortunately, the need to get EU state aid clearance and restrictions on eligibility means that the tax relief will have limited effect in the short term (costing the Treasury only around £10m).
However we will be working with the government to ensure that voluntary organisations understand the tax relief and how it may benefit them.
4. AME Cap confirmed
The Chancellor confirmed that the Annually Managed Expenditure (AME) cap would be set at £119.5bn in 2015/16 rising in line with inflation to £126.7bn in 2018/19. This is in line with forecasted spending on social security but means that there is little room for manoeuvre if demand increases.
5. Air ambulances, emergency services, scouts and guides
The Chancellor also extended the range of organisations that will benefit from the LIBOR fines fund to include search and rescue and lifeboat services. He also announced £10m in support to scouts, guides, cadets and St John’s Ambulance. VAT will also be relieved for Air Ambulances and Inshore Rescue boat services across Britain – reducing their costs.
Overall, however, the budget saw little change for the sector, with the Chancellor continuing his cuts to public spending and using any savings to reducing taxes for key industries and sections of the electorate.
Here are the key documents if you want to look at the details yourself:
- the “Red Book” Budget 2014
- the policy costings document which shows how much individual measures announced in the Budget will cost
- letter from Economic Secretary to the Treasury regarding measures that will affect charities in Budget 2014.
Continue to follow analysis of Budget 2014 via hastag #volsecbudget