Alongside NCVO and the Charity Tax Group, CFG has worked on outlining the key challenges for charities with the existing package of COVID-19 support measures and proposing some solutions to these challenges. If implemented, the changes would enable charities to make better use of the schemes, helping to mitigate some of the financial strain that charities have been under.
Some welcome progress has already been made against the removal of the 50% trading restriction for charities for the CBILs loans and the extension of the Small Business Grant, and it’s pleasing to see that there is some movement on the schemes to make them fit for purpose for charities.
The DCMS Select Committee has also echoed our asks for the schemes to be amended as we have proposed and for the Secretary of State to report back to the Committee by 5 June. We will be working hard with colleagues to ensure these proposals move forward as quickly as possible
Coronavirus Job Retention Scheme
Many charities are making use of this, yet in its existing form, there are challenges. We propose allowing charity staff with specific skills that support wider society, to be redeployed within their charity as a volunteer, and this recommendation has been supported and echoed by the DCMS Select Committee to be implemented within a month and moreover, that charities be given time to plan for the end of the scheme.
Coronavirus Business Interruption Loans
CBILS have not proven popular amongst charities to date and even for those who have applied, too many have been turned away by lenders. To help this we have suggested government underwrite 100% of the loans and cap interest rates after the first year. We are very pleased that the 50% trading restriction has now been removed for charities, meaning that more should be eligible.
Small Business Grant
At a time when cashflow is a primary concern for charities the £10k small business grant would be extremely valuable. As it stands, receiving charitable business rates relief, rather than small business or rural rates relief, means they are not automatically eligible. We propose that small charities that fit other relevant criteria should get these grants, especially those that cannot get access to the £750m government has provided to charities.
We are very pleased that the scheme has now been extended and that Local Authorities have been asked to prioritise businesses in shared spaces and small charity properties that would meet the criteria for Small Business Rates Relief. Businesses must be small, under 50 employees, and must also be able to demonstrate that they have seen a significant drop in income due to Coronavirus. LAs have the discretion to adapt the approach to local circumstances, so if you think you might be eligible, contact your LA and apply.
Retail, Hospitality and Leisure Grant
The grant fund benefits certain types of charity, but due to state aid rules, the amount of money is restricted to just over £700k, which means charities with a large retail footprint will not receive full benefit from the scheme. We propose government should reconsider the fund being regarded as state aid, which would not only benefit charities but also struggling high street shops.
Deferment of PAYE and NICs
HMRC has helpfully automatically deferred payment of VAT during the crisis. This has provided a lifeline for many charities. But when charities have asked to defer payment of PAYE and NICs they have incurred a 2.6% interest rate on the loan. We have asked that all charities should have the option of deferring PAYE and NICs payments and removing the interest payable to bring it in line with the VAT deferral.
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