Budget includes suite of tax changes intended to benefit charities

30 Oct 2018 News

HMRC building

Fergus Burnett

The government has announced a suite of tax changes and new schemes in today’s Budget document which will be of benefit for some charities.

Minor tax updates

The Budget will:

  • Increase the upper limit for trading that charities can carry out without incurring a tax liability from £5,000 to £8,000, where turnover is under £20,000, and from £50,000 to £80,000 where turnover exceeds £200,000.
  • Allow charity shops using the Retail Gift Aid Scheme to send letters to donors every three years when their goods raise less than £20 a year, rather than every tax year.
  • Increase the individual donation limit under the Gift Aid Small Donations Scheme to £30, which applies to small collections where it is impractical to obtain a Gift Aid declaration.

The Treasury estimates that these changes will cost £5m, although previous estimates of the cost of GASDS have been over-optimistic.

Rate relief for high street retailers

The government will cut business rates by a third for high street retailers for the next two years. It is not yet clear whether the policy will benefit charity shops.

Charities currently receive 80 per cent mandatory relief on business rates, and local authorities can exempt them from the other 20 per cent, although relatively few do so. It is not yet clear whether the two reliefs will work in tandem.

If charities get a third of their remaining bills reduced, it could save between £15m and £20m. However the relief is intended to attract more retailers to high streets, so it could also drive up rents.

£650m for social care

The government will distribute £650m to local authorities to spend on social care.

Government spends about £22bn on social care, of which up to 20 per cent is with the charity sector, meaning that the extra money could mean £130m of extra funding for charities.

Housing reform

The government has offered a suite of changes to housing rules which may make it easier for community land trusts to offer affordable housing.

“The Localism Act allows the people who know their area best to come together to prepare neighbourhood plans and development orders, to ensure they get the right homes, in the right places,” the Budget document says. “The government will provide £8.5m of resource support so that up to 500 parishes can allocate or permission land for homes sold at a discount. 

“Neighbourhood plans and orders are approved by local referendums, and the government will update planning guidance to ensure that these cannot be unfairly overruled by local planning authorities. The government will also explore how it can empower neighbourhood groups to offer these homes first to people with a direct connection to the local area.”

Debt and credit

The government has announced a group of measures which will see it work with charities to help individuals in debt, including a new “prize-linked saving scheme for credit unions”. Few details are currently available.

Blood Bikes

The government has amended vehicle excise duty to allow the charity Blood Bikes to access the same reliefs as other essential vehicles.

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