Today’s budget is one of three ‘fiscal events’ marking the countdown to the next election and will no doubt be driven by political posturing more than economic imperatives. Despite the usual early leaks, indications are that there will be a surprise announcement, a rabbit in the box, most likely targeted at Conservative voters. >The theme this year is set to be ‘resilience’ - the Chancellor has already taken to twitter this morning to tweet about a resilient coin to reflect a resilient economy - and while the economic indicators look like they’re finally going in the right direction, we’re likely to be reminded that it’s not over yet (indeed it looks like the structural deficit is still going up!). The underlying message being - stick with this Government and the long-term economic plan will be delivered.
In the CFG offices we will be listening in, as always, to figure out what all this will mean for the charity sector. We’ll also have our budget bingo score cards at the ready – this year charities, gift aid and social investment tax relief and AME (annually managed expenditure) will all be jotted down in expectation of at least a single mention. Somehow though I don’t think any of these will feature as heavily as they have in previous years and maybe that’s no bad thing. It certainly won’t be like 2011, the ‘freak’ budget, where the Chancellor mentioned ‘charity’ in its various forms an unprecedented 11 times in his speech. It was then that Charities Online, the Gift Aid Small Donation Scheme (GASDS), Gifts of Art and incentives for legacy giving first entered the budget lexicon. And we can only hope it won’t be like 2012, when the single utterance of ‘charitable’ in the speech was far less favourable and created outcry from the sector; but as well as the (since reversed) tax relief cap the budget book included a few welcome boosts for charities. There was an increase in ‘small donations’ under GASDS from £10 to £20, simplified administration for charity shops and the promise of a HMT led review of tax breaks for social investment. 2013 saw further detail annnounced on a number of these and the crowd pleasing reduction in employment allowance. Many of these initiatives have now reached fruition, and this year’s charity specific measures are expected to build on them - for example, we’re expecting the rate of the social investment tax relief to be announced.
So what are the charity specific references we can expect to hear reference to?
- Gift Aid - In 5 years of following budgets for their impact on the charity sector I have yet to read a budget document that doesn’t talk about ‘gift aid simplification’; this year will be no different. We can expect to see reference to research around the declaration and further efforts to make it easier to claim gift aid for digital donations. Much of this work is already underway, so for many in the sector it’s nothing new. What would be new and exciting would be a small budget allocated to this work and promotion of gift aid. A real possibility given the damning NAO report earlier this year. Let’s wait and see.
- Social investment tax relief - Social investment continues to be flavour of the month in the Government, despite reluctance from many charities to explore this avenue. The new SITR, similar to CITR for small business, has been developed as a supply side incentive.Today, we can expect the rate of the relief to be announced. I’m anticipating it being set around 30%. While we support the tax incentive and want it to be as workable as possible, one concern we’ve had has been that it might dissuade people (most likely to be higher rate tax payers) from making gift-aidable donations in favour of social investments. Set at 30% it would be just above the 25% that people paying tax at a rate of 40% and slightly below the 31.25% for those paying tax at a rate of 45%. We hope that this wouldn’t impact negatively on gift-aid donations, and would ask that HMT commit to reviewing the impact of the rate in 2 years times.
- The £40m ‘money plus advice’ fund - Cabinet Office appear to have a spare £40m to play with and have been floating the idea of a‘money plus fund advice’ for charities facing financial difficulty. We’ve been giving consideration to how this could be shaped – it’s important to get it right as £40m might sound plentiful but won’t go far given the scale of financial challenges faced by some charities. One idea we’ve been exploring is using some of it to support charities get advice on managing pension deficits - possibly the biggest risk for some of our members and an area where good advice can make a real difference. It would be good to get confirmation that the fund will materialise and clarity on the sum total.
- Annual managed expenditure - Details of this will be announced and will be of interest for many in the sector working on welfare reform. On this I’d refer interested readers to the work of NCVO and others.
- The general operating environment – We’ll be paying attention to references to business rates, the expected increase in the personal allowances, measures to support small businesses the outlook for public finances and and anything else that will impact on the operating environment for charities.
So keep posted for our post budget synopsis. CFG has also written to the Chancellor with a wider group of charities and umbrella bodies highlighting broader issues for the sector which can be found here.
Edited August 2018
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