Environmental, social, governance (ESG) Tax and VAT Charity finance policy

Live Blog: Autumn Budget 2017

On Wednesday 22nd November at 12:30pm the Chancellor, Philip Hammond, will deliver the first Budget since the General Election in June. If you can’t tune into the Chancellor’s speech, then do follow this blog for key announcements and early analysis of how they will impact on the charity sector. Also keep an eye on the following twitter accounts: @CFG_OBrien; @CFG_McLoughlin.

17.35 - HM We'll be publishing CFG's Autumn Statement briefing so keep an eye on that for more in-depth analysis (and some tidbits hidden in the the Treasury and OBR documents). 17.30 - HM

Budget response from Buzzacott

"We were first excited to hear of the long-awaited Simplification to Gift Aid donor benefit rules but when we read on were disappointed that the government had only announced a withdrawal of one of the thresholds. There appeared to be winners and losers from this single change but we have since been told that this is a step or “splicing” change . Hence this should be good news or no change for most. The limited £25 value of donor benefits for (“as a consequence of”) donations of £100 - £1,000 will no longer apply from 6 April 2019 and swept up within the 5% benefit limit currently applying to donations over £1,000. It appears good news for some higher-level supporter schemes which will no longer be restricted to the £25. For example, in the arts sector there are often Patron supporter schemes paying between £400 and £1,000. The value of benefits permissible under Gift Aid to these supporters for free exhibitions etc. will now increase." Luke Savvas, Partner 15:50 - KB

Budget response from Sayer Vincent

Gift Aid donor benefit rules As announced at Autumn Budget 2017, the government will legislate in ‘Finance Bill 2018-19’ to simplify the donor benefit rules that apply to charities that claim Gift Aid tax relief on donations. Currently there are a mix of monetary and percentage thresholds that charities have to consider when determining the value of benefit they can give to their donors in consequence of a donation on which Gift Aid can be claimed. These will be replaced by two percentage thresholds:

  • the benefit threshold for the first £100 of the donation will remain at 25% of the amount of the donation
  • for larger donations, charities will be able to offer an additional benefit to donors up to 5% of the amount of the donation that exceeds £100

The total value of the benefit that a donor will be able to receive remains at £2,500. Four extra statutory concessions that currently operate in relation to the donor benefit rules will also be brought into legislation. A summary of responses to a consultation on simplifying the Gift Aid donor benefit rules will be published on 1 December 2017. The changes will have effect on and after 6 April 2019.

Helen Elliott, Sayer Vincent commented: "We have been awaiting the outcome to the donor benefit consultation for some time now. The good news is there is a long lead time before implementation and this is better for donations of between £500 and £1,000. But the bad news is that the benefits permitted between £100 and £500 drop from £25 to just 5% of the donation – so between £5 and £25."

VAT registration threshold In response to the Office of Tax Simplification’s report Value Added Tax: Routes to Simplification, the government will consult on the design of the threshold, and in the meantime will maintain it at the current level of £85,000 for two years from April 2018.

Helen Elliott commented: "There had been rumours that the threshold would be dropped to half or even a quarter of the current level so that many more small businesses were required to register this is a relief as a it would have had a huge administrative burden on many charities not currently registered for VAT." 15:35 - KB

Response from Waverton Investment Management

"The budget has confirmed that almost three quarters of a billion pounds in LIBOR fines have been distributed to support certain areas of the charity sector. Whilst a further £36m has been committed over the next three years, this will be the last set of payments, potentially leaving some organisations looking for alternative funding streams at a time of continued pressure on household incomes." James Pike, Head of Charities. 15:30 - KB

Budget response from Ecclesiastical

David Britton, Ecclesiastical’s charity director, said: “It’s good news for charities that there will be no further IPT increases following today’s Budget announcement. “Buying insurance is an unavoidable cost for charities; either because they are legally required to, or because they are acting responsibly by putting adequate protection in place for their activities and assets. The doubling of IPT in the past two years up to 12% has been very hard to take for charities and any further increases would have been devastating. “We will continue to work hard alongside the Charity Finance Group (CFG) to raise awareness of the negative impact of IPT on the work that charities do and to urge the Government to consider an exemption or reduction for third sector organisations.” 15:20 - KB

And a final response from haysmacintyre:

“Business rates remain a burden to the charitable sector, despite existing reliefs available to charities. Today’s announcement that business rate rises will be linked to the lower CPI measure of inflation from April 2018, much earlier than planned, should come as welcome news to the sector.” Louise Veragoo, NFP Tax Director. 15:15 - KB

Budget responses from Kingston Smith LLP

Gift Aid Donor Benefit Rules, Jamie Whale, Tax Manager at accountants and business advisers, Kingston Smith. "Following consultation, the Government will simplify the Donor Benefit rules to create two percentage limits to apply from April 2019:

  • The benefit limit applying to the first £100 of any donation remains unchanged – 25% of the amount of the donation
  • For larger donations, charities will be able to offer an additional benefit to donors – up to 5% of the amount of the donation in excess of £100

The total value of the benefit that a donor will be able to receive will remain at £2,500."

From Kingston Smith LLP: "This change increases the benefits that may be provided in relation to donations over £100. A donor of £1,000, for example, may now receive a benefit valued at £70 without compromising the Gift Aid status - previously the limit applying would be £25. "Those in the NFP sector may not relish the need to get used to a new set of rules, but overall we expect that they will welcome this simplification, which will remove a previous 'cliff-edge'." 15:10 - KB

Budget response from Access Insurance

  • No mention of Insurance Premium Tax increase which is good news for charities as the sector has been hit hard by increases over the last couple of years. However the government have not announced an IPT tax cut or relief for charities.
  • Three new pilot schemes and a £28m fund have been announced with a view to ending homelessness by 2027. Is this enough? Many of our homelessness charity customers have been doing incredible jobs on shoestring budgets and still rough sleeping numbers are rising. We hope the Government will consult charities who have experience in this area, including Homeless Link, the sector’s representative body. Provision of housing alone will not solve the complex problem of rough sleeping and the Government need to do ensure they are listening to experts and understanding the problems fully, before they roll out solutions.

15:05 - KB

Budget response from Standard Life Wealth

“With four mentions of the word “charities” in the Budget document, this was not a big Budget for charities, although several announcements will impact the sector. For example, the Budget included an increase to the national minimum wage, a new duty to be levied on certain cider to target excessive consumption by vulnerable individuals, and funding to modernise the poppy factories in Richmond and Edinburgh. The completion of the LIBOR Charity Funding Scheme was also announced, with a further £36 million of banking fines to be shared out over the next 3 years among armed forces, emergency services and other charities.” Julie Hutchison, Charities Specialist at Standard Life Wealth. 14.55 - KB

Budget response to the changes to Gift Aid donor benefit rules from haysmacintyre

“Although the detail is yet to be published, we are pleased to learn that an end is in sight for the Gift Aid donor benefit review. Although not unexpected, it has been confirmed that the current three monetary thresholds will be reduced to two and all the extra-statutory concessions will be legislated, with changes coming into effect from April 2019. This should end the long-running uncertainty around these rules and we hope that charities will be given enough guidance and time to make any changes that might be necessary.” Louise Veragoo, NFP Tax Director. 14.45 - KB

Budget response to the Apprenticeship Levy from haysmacintyre

“With their large volunteer workforce, charities continue to campaign for more opportunities to make use of the payments they make into their Apprenticeship Levy account. Today’s announcement that the government will “keep under review the flexibility that levy payers have to spend this money” will hopefully keep this dialogue open and give charities a chance to argue their case for spending more of these funds.” Louise Veragoo. NFP Tax Director. More on the Apprenticeship Levy in our full Budget briefing paper which will be published later this afternoon 14.16 - HM

A final word from Caron Bradshaw, CEO of Charity Finance Group

"For a government looking to the future it was disheartening to only hear references to business and physical infrastructure. This is backward looking, because our future prosperity comes from having strong communities which charities help to create. Bricks and mortar is fine, but real growth comes from sustainable communities where people want to live. We need to put our role at the centre of the economy and society in front of politicians, so that public investment benefits everyone. It is too early to say whether Gift Aid Donor Benefit Rule changes will help or hinder the sector, and we'll need to read the fine detail closely."

13.43 - HM So quite a few items on CFG's #charitybudget bingo has not been covered (targeted charity giveaway, Charity Commission funding) so it's now time to head into a deep dive into the Treasury and OBR's papers.

13.41 - HM Now that Hammond has sat down, CFG's Caron Bradshaw and Andrew O'Brien will be taking part in a quick Periscope where they'll be discussing the key points for charities from the budget. Head on over to CFG's tweets to make sure you do not miss it.

13.41 - HM Councils will also be able to charge a 100% premium on council tax on empty properties. This is being combined with an established task-force to eliminate homelessness and rough sleeping by 2027.

13.37 - HM HOUSING £44bn for housing over the next 5 years, with 300,000 more homes being built every year. £34m to develop construction skills Solving the housing challenge takes more than money, takes planning reform. Will focus on the urban areas where most people want to live and where jobs are and will protect greenbelt. Will put the needs of young people and will make sure that the council priorities first time buyers and young renters. The highest level since 1970s. Stamp duty will be abolished for first time buyers and/or where the house is under £300,000. Are the large announcements on housing and Help to Buy because the Conservatives are scared of how strong young (mostly Labour voters) feel on housing?

13.29 - HM NHS This is an area that has faced continued public pressure since the GE in June 2017. Hammond announces an extra £10bn for the NHS immediately to capital investment for front line services. Outside of the spending review, Hammond has pledged making an additional resource funding commitment of £2,.8bn to the NHS England. This means £350m for this winter, and the rest will be given in 2018/19. Hammond does not commit to extra funding for NHS workers pay, but promises that if a review recommends this then he will do in the future.

13.25 - HM VAT registration threshold remains unchanged. Hammond has committed to keeping point that small businesses pay VAT for the next two years. Currently the rate sits at £85,000, which is a lot higher than the rest of the EU.

13.22 - HM Hammond addresses the concern around the introduction of Universal Credit (UC). He states various changes:

  • Removed the 7 day waiting period at the beginning of a claim so entitlement will start on the first day of the claim.
  • Will change the advancement system so any household can access a month advancement within 5 days, and will be able to do so online.
  • And anyone with housing benefit will continue to receive 2 weeks when switching to UC.

This will be good news for charities who work with beneficiaries who have been impacted by the changes to UC.

13.20 - HM The National Living Wage, from April, will rise by 4.4%, from £7.50 an hour to £7.83. This should give full-time workers a further £600 pay increase.

13.17 - HM Increase in Personal Allowance to £11,850, charities need to make sure that they check donors are still paying tax for Gift Aid more complex tax picture.

13.15 - HM Wales will get £1.2bn more in funding. With Scotland receiving £2bn and Northern Ireland £650m. This could be good news for charities in Wales and the other devolved nations.

13.12 - HM 100% Business Rates Retention Pilot in London. This isn't being dropped, but perhaps means it will be delayed nationally? Supposed to be in place by 2020. Charities worried about financial impact on local authorities

13.10 - HM Hammond has announced the support for further education in Maths beyond GCSEs. Could this mean a new generation of charity finance directors are being created!?

13.06 - HM Hammond states that £500m will be invested into the tech sector, from fiber broadband to developing 5G infrastructure. This will be good news for charities in rural areas. The Chancellor also announces a new Geospatial Data Commission to develop a strategy for organisations to use the government's location data to support economic growth. £20bn has also been promised as investment help UK tech businesses to scale up. There appears to be no reason why this wouldn't be invested in charities who work in the tech sector as well.

13.00 - HM Increase and extension of the National Productivity Fund to be £31bn. Already the government has provided an additional £23bn of investment, over a 5 year period, to the UK’s infrastructure. This means that Chancellor is going for traditional bricks and mortar investment approach, not social infrastructure - mean less discretion to fund public services.

12.58 - HM OBR has revised down the forecast for GDP to 1.5% in 2017, 1.4% in 2018, 1.3% in 2019-20. However, GDP is expected to rise to 1.5% in 2021 and 1.6% in 2022.

12.55 - HM Hammond has expanded on debt peaking, with the Office of Budget Responsibility (OBR) expects debt to peak this year, and then gradually fall as a share of GDP.

12.53 - HM Tick of UK productivity on your bingo cards! This has long been an area of concern. Hammond says that the last 16 fiscal cycles have seen no increase of productivity to 2%, which is the standard the OBR uses to be confident the UK economy is 'strong and stable'.

12.49 - HM OBR revises down estimates - GDP to grow 1.5% in 2017, 1.4% 2018, 1.3% in 2019-20. This means the economy is expected to slow for next three years and is a downgrade from the predicted 2% growth stated at the Spring Budget in March 2017.

12.47 - HM Hammond says that the government needs maintain fiscal responsibility while 'debt is, at last, peaking'. That's a very politician way of saying that the UK's debt has significant risen the financial crisis in 2007. Many charities, will of course, be aware how the increase in the UK's debt and the Conservatives determination to cut this has impacted on their funding.

12.44 - HM After discussing Brexit, Hammond has moved straight onto the UK's potential future role in technology, whether that comes from universities or factory floors. He says this is an area that the UK needs to invest in. This could be good news for charities who rely on cutting edge technology, especially in the medical sector.

12.41 - HM Over £700m has been invested in Brexit so far, and Hammond has pledged a further £3bn for Brexit, if and when it's needed.

12.40 - HM Hammonds started with a tough fighting stance for the new future of the UK’s economy. Brexit is one of the first points that has been mentioned (not sure how Hammond could have avoided it!). Is this Budget going to be the soothing statement the City and UK businesses are calling out for?

12.32 - HM We're reaching the end of PMQ's. Now's the time to get another cup of tea/eat a quick sandwich! 22/11/17 - 12.00 - HM

The most boring budget in recent memory?

We're just under an hour away from Hammond taking to the dispatch box to release his budget and already rumours are circulating about what is in the budget. Some commentators are describing it as the most boring budget in recent memory, with the Chancellor being given very little room to manoeuvre on any large scale, headline grabbing policies. Andrew has already mentioned the reports of announcements of the NHS receiving additional funding and more money for social care. It appears that housing might also be a large issue that the budget will try and cover. Any announcements on housings, and by extension what this could mean for Local Authorities funding and spending, will be scrutinized by charities that either work around housing, or with beneficiaries who are affected by the housing crisis. While we haven't included this on our budget bingo card it'll be interesting to predict what, if any, policy announcement will be subjected to a U-turn over the next few weeks. Both Hammond's Spring Budget in March 2017 and Osborne's Autumn Statement in November 2016 resulted in embarrassing U-turns by the government on key policy issues. With the Conservatives having no majority, and with increasingly hostile debates around austerity (highlighted by Andrew below) and Brexit within Conservative backbenchers, it might be an unfortunate third time unlucky for Hammond. 22/11/17 - 11.41 - HM

#charitybudget Bingo

We've once again given the people what they truly want, another CFG BUDGET BINGO CARD! Download yours and let us know how you have gotten along at @cfgtweets. AB2017 Bingo! 22/11/17 - 11.19 - AOB

End of austerity?

For many years we have heard repeatedly that there is no money and that we had to get used to cuts. Although there are still plenty of cuts to come, particularly for local government, it appears the broad front on reducing public spending and squeezing pay is due to come to an end. All the parties went into the election saying that they would spend more whether on public services or pay (or both!). There are reports this morning that the NHS will receive an additional few billion and that more money will be pumped into social care. Schools are going to receive more money to help boost maths education. The public sector pay cap looks like it is going to be junked for nurses at least, and maybe teachers as well. What does this mean for charities? Shallower spending reductions will certainly help charities that work to deliver public services but a looser pay cap may, as many charities try to match developments in the public sector, led to increased staffing costs for charities. For the charity sector as a whole, the real test of whether austerity is ending will be at a local level. Will the Chancellor finally allow above inflation increases in Council Tax? Will additional funding be given on social care so that pressure can be taken off other areas? Loosening the purse strings on local government, which accounts for around half of all UK government income, would be the biggest boon to charities, particularly the smallest organisations. 22/11/17 - 10.06 - AOB

What do the morning papers say about the Budget?

A quick review of the morning papers makes for interesting reading. On the positive side, the government is likely to see borrowing for this year fall by between £6-8bn more than it forecast in March - this will give the Chancellor some room to make giveaways today. However, lower productivity growth and concerns about Brexit mean that, according to the FT, borrowing in 2020-21 will have increased by £10bn. This means that the Chancellor's wiggle room of £26bn in the last year of the Budget forecast (which he could have used for more tax cuts or spending) will now fall to £13bn. This isn't as much money as it may sound, and means that the Chancellor will probably want to be cautious about spending commitments in this budget. Apart from a rush announcement on schools (despite the Treasury saying yesterday that there would be no policy announcements before the Budget), there is very little in the Budget. This could all be good expectations management or it could indicate that a lack of a majority and the focus on Brexit has led to very little new thinking in No.11. One thing which has cropped up in a few news sources is the idea that Hammond will bring forward increases in the personal allowance to £12,500 from 2020-21 to this year. This will cost him money now, but if he freezes the threshold for the rest of the Parliament, he will claw back some of that money by the end due to inflation. For charities, a quicker increase will further erode the pool of donors that are eligible for Gift Aid, but if it boosts disposable incomes for the population as a whole, could lead to a more positive picture for fundraising. Remember, you can keep following all CFG's work on the Budget via the hashtag #charitybudget 22/11/17 - 9.34 - HM

What can charities expect from the budget?

On the morning of Budget day, we know that charities are wondering what they can expect from Hammond's Autumn Budget. Being described as a 'make or break' Budget for Hammond, today will be a big test of how the government think the economy is doing. Is it really strong and stable, or weak and wobbly? CFG's Andrew O'Brien has written a blog post on what charities can expect from this years budget. Read all of Andrew's analysis on likely tax increases for charities and whether austerity is ending here.

This post was last reviewed on 13 November 2018 at 12:07
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