2016 Budget – what do charities need to know?

Earlier today the Chancellor delivered his latest Budget in the House of Commons, updating MPs on the economic climate and setting out the Government’s spending priorities. Headline measures included growth figures that have been revised down, and the introduction of new policies including incentives for savers and a new sugar tax levied on soft drinks to try and tackle the growing obesity crisis.


Charities rarely play an integral part in a Chancellor’s speech, but our bi-annual trawl of the Treasury’s budgetary documents uncovered a number of policies that will impact on the charity sector.


First of all – and this did get a mention from George Osborne in his speech – the trend of using revenue from LIBOR fines to support charities continues. The Chancellor announced that another £45m of banking fines will be used over the next four years to support military charities and other good causes, with recipients including Air Ambulance Northern Ireland, the National Mesothelioma Centre, the Royal British Legion, and a number of children’s hospitals across the county.


Charities also benefitted from the income raised through the ‘Tampon Tax Fund’ that was announced in the Autumn Statement, with £12m being committed. Organisations receiving funding as a result of the fund include Breast Cancer Care, Girlguiding and the White Ribbon Campaign. Interestingly, given recent government policies designed to clamp on ‘taxpayer-funded lobbying’ (you can read more about the anti-advocacy clause here), £650,000 will be given to Jo’s Cervical Cancer Trust to “launch the ‘Eradicate Cervical Cancer’ campaign” to try and increase levels of screening.


Whilst the usage of both fines and the Tampon Tax Fund to support charities is good news and will be welcomed, there are concerns about the way that funding is distributed in this way – as my colleague Rhodri Davies has explored previously. For example, LIBOR fines are (at least theoretically) a temporary measure, and it does pose a question as to whether income distributed in this manner will dry up when (again, theoretically) LIBOR fines cease.


There are also transparency issues as to how recipient charities are determined. Whilst the causes listed in the Budget are undoubtedly worthy, charities operating in other areas may feel that they should be given the opportunity to bid for these funding pots. We believe that the Government should look at the processes they use to distribute funding to charities in order to make sure that they are sustainable and transparent to allow the widest range of charities to benefit.


There is positive news for Community Land Trusts (CLTs), with £60m being made available from the cancellation of plans to exclude significant investors from the proposed higher rate of Stamp Duty on additional properties. CLTs still remain little-known at present, but this additional support could help to tackle the UK’s affordable housing crisis, with particular emphasis being placed on the South West. CAF has been active in supporting CLTs in the South West already – read our recent press release here.


The reform of business rates continues, with business rate relief more than doubled permanently, meaning that 600,000 small businesses will pay no business rates at all. The Government has previously announced plans to devolve the control and spending of business rates to local government, and this will undoubtedly have an impact on local government spending as well as repercussions for charity shops, particularly if local authorities are expected to fill the gap caused by rate relief changes.


There are a number of smaller announcements that charities also need to be aware of. The Government commits to giving intermediaries a greater role in administering Gift Aid, which will be included in the Finance Bill in the next few weeks. Charities under the jurisdiction of the Isle of Man’s High Court will be able to qualify for UK VAT charity reliefs. The Rough Sleeping Social Impact Bond announced last year has been doubled from £5m to £10m. The Employment Allowance will be increased – this reduces the cost of employer National Insurance Contributions and will be worth up to £3,000 for charities and businesses each year from April. And finally, tax charges will no longer be applied to loans or advances made by close companies to charity trustees for charitable purposes.


As ever, quite a lot of to take in for charities without the kind of dominant announcement that we’ve seen in the past. We’ll continue our analysis and report back on our Giving Thought blog with any further thoughts in the next few days.


We’d love to get your thoughts though – what does the Budget mean for your charity? Let us know at campaigns@cafonline.org

Steve Clapperton

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