John Hemming explains why the budget has some good news for charity finance
The Charity Tax Group welcomes some positive announcements for the charity sector in the 2015 Budget but we are keen to ensure that charities are not adversely affected by a number of forthcoming tax reviews.
Overall this is a positive Budget for charities. We are particularly pleased that there will be a further VAT refund schemes for another part of the charity sector – blood bike charities – which builds on the refund scheme for search and rescue charities and hospices which will come into effect on 1 April 2015. CTG has been heavily involved in campaigning for VAT refunds for charities and is delighted that an important precedent has now been set for wider refund schemes for the sector.
We had campaigned hard in the run-up to the Budget on the new Diverted Profits Tax, the details of which will be published next week. We welcome the announcement today that civil society organisations will not be affected and that there will be specific exclusions from the tax. We are confident that the Treasury has listened to our concerns on this point – if a charity exclusion had not been built-in the use by charities of trading subsidiaries would no longer have been an option.
The increase in from £5,000 to £8,000 in the amount that can be donated under the GASDS scheme is also very welcome and we believe that this will increase awareness of the scheme, particularly among larger charities. The promised review of the scheme in 2016 needs to look at how the scheme works, particularly for small charities, for whom the eligibility requirements are too strict, but this increase demonstrates the Government’s commitment to making it as effective as possible – we hope this positive approach will be carried forward in next year’s review.
Although there have been reassurances that the business rates review is not targeting charities, we will be working with others across the sector to ensure that this vitally-important relief for charities is protected. The Chancellor announced another review that will be important to charities – into Deeds of Variation. Deeds of variation are very significant for charities. We saw off a proposal to abolish them about twenty years ago as it would have had a massive impact on the legacy income of charities: we need to make sure that this review understands their significance for the sector. We have been assured by the Treasury that the proposed cap on reliefs for serial avoiders will not affect charities but we will be monitoring this closely to ensure that there is not a repeat of the charity tax cap problems.
John Hemming is chair of the Charity Tax Group
