What the does the Budget 2015 mean for the third sector?

Have you listened to the Chancellor’s recent budget statement?  Read up on the new announcements?  No?  Well, don’t worry, SCVO have done the hard work for you!  Scroll down for a summary of the main announcements, our thoughts and a comment from our Chief Executive on #budget2015

SCVO Comment

Commenting on the Chancellor's Budget SCVO Chief Executive Martin Sime said: “SCVO is disappointed that the increased headroom the Chancellor has found within his public finances has not been used to soften the devastating £12 billion he is seeking through welfare cuts, continuing his attack on the poorest in our society. “However, SCVO does welcome further support in the Budget for charities, particularly the extension of VAT rebates to hospices, search and rescue and some medical transport charities. The increase in the small donations Gift Aid Scheme allowance and support for social investment for our sector will help organisations.”

Top Lines

• The Chancellor spoke of need to make £30 billion of savings by 2017-18 - £12 billion of that will come from welfare savings.
• As of 1st April 2015 the personal allowance will increase to £10,600 rising to £11,000 in 2017/18.
• The National Minimum Wage is set to increase from £6.50 to £6.70 per hour. This is the start of an increase to £8.00 per hour by 2020.
• As announced in the Autumn Statement Employment Allowance will be extended to carers and work allowances will remain frozen at their current level.
• From 2015 the government will restrict access to Universal Credit for EEA migrants who are out of work.
• A continued freeze on fuel duty was announced
• A range of tax breaks were announced for the oil and gas sector

Sector Specific Points

VAT Refunds

• In regards to VAT refunds were announced for search and rescue and air ambulance charities, blood bike charities and charities providing rapid response vehicles for medical purposes. Most importantly, it was confirmed that hospice charities will be eligible for VAT refunds from 1 April 2015. SCVO currently supports a targeted approach to VAT relief and very much welcomes the support given to the above.

Business Rates Review

• The Chancellor announced a government review of Business Rates noting that the current system: “has not kept pace with the needs of a modern economy and changes to our town centres, and needs far-reaching reform.” Although Business Rates are a devolved matter this review may spark conversations in Scotland on how the system currently operates.

Gift Aid

• There was a very welcome move on Gift Aid with the government looking to introduce legislation in order to increase the maximum annual donation amount which can be claimed through the Gift Aid Small Donations Scheme (GASDS) to £8,000, up from £5,000. This will allow charities and Community Amateur Sports Clubs to claim Gift Aid style top-up payments of up to £2,000 a year, with effect from April 2016.
• Related to the above is the announcement that, as outlined in the Autumn Statement, the government will legislate to allow regulations to be made to give intermediaries a greater role in administering Gift Aid. This move is the culmination of discussions with the sector and SCVO will keep a close eye on the forthcoming Finance Bill 2015 of which this will be part.

Other Funds

• In the Autumn Statement a £15 million fund for church roof repairs was announced. In his Budget the Chancellor stated that the fund has been ‘heavily oversubscribed’ and consequently the government will now provide a further £40 million for the fund.
• It was also announced that the government will commit £75 million of LIBOR fines over the next five years to support military charities and other good causes. The extensive list includes £10 million to support the purchase of new air ambulances across the UK including Scotland.
• Although both of these measures are welcome, SCVO believes that these sums should have been subject to Barnett consequentials therefore giving the Scottish Government the opportunity to award the monies as it saw fit. For example, the funds available for church repairs could have been opened up to include repairs to village halls.

OCS

• It was also announced that the Office for Civil Society will take forward the procurement of a partner to deliver subsidised fundraising training to small charities in 2015-16. It is our understanding, however, that as the OCS has no remit in Scotland this initiative will not apply here.

Social Investment

• On Social Investment Tax Relief the government will set the rate of Income Tax relief for investment in Social Venture Capital Trusts (Social VCT) at 30%, subject to state aid clearance. Investors will pay no tax on dividends received from a Social VCT or capital gains tax on disposals of shares in Social VCTs. The government will legislate for Social VCTs in a future Finance Bill and as already stated SCVO will pay close attention to this Bill. The primary concern with Social VCTs is that wealthy donors may choose to make loans through this scheme rather than donating through Gift Aid.
• Lastly, as announced in the Autumn Statement companies benefiting substantially from subsidies for the generation of renewable energy will be excluded from also benefiting from EIS, SEIS and VCTs with effect from 6 April 2015, with the exception of community energy generation undertaken by qualifying organisations which will in future become eligible for the Social Investment Tax Relief (SITR).