Quick round-up of Autumn Statement 2014

The Chancellor has just finished delivering the last Autumn Statement before the General Election.

On 4 December, NCVO hosted an online discussion, on this blog post and on twitter, about the Autumn Statement with members able to give their views and ask questions. Follow NCVO’s analysis on twitter through the hashtag #volsecAS14.

But what has been announced and what will be the impact on voluntary organisations? Here is NCVO’s quick round up of the main announcements:

Big increase in Social Investment Tax Relief threshold

NCVO proposed the creation of a Social Investment Tax Relief back in 2012 as a way to help charities and Community Interest Companies get access to finance and broaden the pool of social investment available. However when the relief was first proposed, the limit that an organisation could receive through the scheme was around £275,000 over three years. We believed that this was too small and would reduce the effectiveness of the relief and called for the threshold to be raised to £5m per year.

The government appears to have taken this view on board and will now propose to the EU that organisations should be allowed to raise £5m per annum per organisation through SITR, up to a maximum of £15m, which will make the relief much more effective.

We have also created a quick guide to the Social Investment Tax Relief which takes into account the changes announced today to help charities and CICs navigate the scheme.

More LIBOR fines for Armed Forces charities

Another £50m has been committed from LIBOR bank fines to support military charities and other good causes over the next 6 years. This carries on from a similar announcement made last year.

VAT refunds for search and rescue, air ambulances and hospices

From April 2015, UK search and rescue and air ambulance charities will be eligible to claim refunds on VAT they have paid on purchases of goods and services for their non-business activities.

The government has also announced that it will repay the VAT that hospice charities incur following the recommendation of the Fair Play Review of health services. While this is welcome news, irrecoverable VAT will cost the rest of sector hundreds of millions per year. This announcement may be an opportunity for the government to consider a wider change to reduce this cost to charities.

Donor benefit review to continue

Rules around the value of gifts and benefits that charities can give to their donors without losing their Gift Aid eligibility are notoriously complicated. There’s a review into this at the moment, and following consultations between HMRC and the sector, the government says it will be continuing the review. More substantively, they indicated that there will be changes to clarify the guidance coming in the next year.

Greater clarity around what charities can give donors is welcome and will be useful as an increasing number of organisation enter the fundraising space over the coming years. It will also help charities that are considering what steps they can take to improve.

A new tax relief for orchestras

There are around 400 orchestras in England and Wales that are registered charities, according to our data, with income of around £160m. They are set to benefit from a new tax relief which will be consulted on in 2015 and come into effect in April 2016.

National insurance cut for charities with apprentices under 25

Employer National Insurance contributions for apprentices under the age of 25 has been abolished in the Autumn Statement, so charities which have hired young apprentices will see a cut in their NI bill.

Increase in business rate discount for charity shops

Charity shops will benefit from an increase in business rate retail relief of £500 to £1,500 in 2015-16. The discount applies to shops, pubs, cafés and restaurants with a rateable value of £50,000 or below.

Early intervention pilot announced

One of the main recommendations of NCVO’s manifesto was for more spending on more preventative projects. The government has now announced an early intervention pilot for 0- to 2-year-olds which, if successful, may lead to other pilots being announced in the coming years.

Government to review structure of business rates

While charities have not been directly referred to as part of this review, business rate relief is important for tens of thousands of charities that use buildings to deliver services and is worth around £1.6bn to the sector (more than Gift Aid).

The aim of this reform is to support small businesses, but we’ll be keeping a close eye on this to ensure that charities are not negatively affected by any proposed changes.

How will these changes affect you?

NCVO will be hosting an online discussion tomorrow afternoon between 3:30-5pm, on this blog post, about the Autumn Statement where members will have the chance to air their views and ask questions about the proposed changes.

All you have to do is leave a question or comment in the box below.

 

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Andrew was NCVO’s senior policy officer. He covered issues around funding, social investment, tax and the impact of the economy on the voluntary sector. Andrew has left NCVO, but his posts are kept here for reference purposes.

3 Responses to Quick round-up of Autumn Statement 2014

  1. Mags Mercer says:

    Question really:

    We are a charity supporting vulnerable and homeless adults over the age of 25 (primarily). As we exist to relieve poverty, I wondered if there can be any tax relief for charities on:

    VAT payments?
    NIC/Tax contributions to HMRC?

    Is this something NCVO could lobby support for?

    Look forward to your thoughts.
    Thanks & Kind Regards

  2. Andrew O’Brien says:

    Hi Mags,

    Thanks for your question. Charities benefit from a number of tax relief on VAT and you can find out more information on the specific circumstances here:

    http://www.hmrc.gov.uk/charities/vat/purchases.htm

    Unfortunately, the Chancellor’s announcements are not likely to help your charity this time around, but hopefully it will open up a conversation on irrecoverable VAT `which is a big cost for many charities.

    In terms of NIC and tax contributions, charities do not have any special dispensation on NICs, although yesterday the Chancellor did scrap employers NI for employers of apprentices under the age of 25, which could be a significant boost.

    There is also the Employment Allowance which gives charities a discount on their NI of up to £2000 – if you haven’t claimed this, check it out here: https://www.gov.uk/employment-allowance

    Hope that this is useful.

  3. Pingback: The Chancellor’s Autumn Statement | Support Staffordshire Stafford & District Headlines