SCVO Briefing - UK Budget

Welfare cuts

• Cuts and changes to tax credits will have a huge impact on families. There are over 290,000 households in Scotland with children who currently receive tax credits, much of which goes to working families on low wages.
• Benefits for people of working-age will be frozen for four years.
• Further restrictions to housing benefit for people aged 18-21 will apply from April 2017. Young people will face more barriers to living independently and conditionality will make their lives more difficult.
• Cuts to ESA will increase the additional barriers and costs faced by disabled jobseekers.
• The Education Maintenance Allowance in England and Wales will be replaced by loans for new applications from 2016/17. This will have a consequential impact on the Scottish Block Grant.
• Disability benefits, such as Personal Independence Payment, Attendance Allowance, and Disability Living Allowance, will not be taxed. Eligibility for these benefits continues to be squeezed under the Work Capability Assessment.
• There will be no further cuts to pensioner benefits.

Impact on Scottish charities

• A national living wage of £7.20 per hour will be introduced. Employers may use this to brand themselves as ‘living wage employers’, despite paying less than the recommended level set by the Living Wage Foundation, which is currently £7.85.
• The personal allowance for income tax will be raised to £11,000 in 2016/17. This will have a major impact on Gift Aid, as the number of people paying the income tax that can be gifted to charities will be reduced.
• The threshold for zero inheritance tax threshold will be raised to £175,000. This will cut into the incentives the Chancellor offered for legacy giving in the last Parliament.
• The ability for charities to claim research and development tax credits will be removed.
• The employment allowance subsidy for covering employer’s National Insurance costs will be raised by £1,000 to £3,000 from April 2016 to support small businesses and charities to create jobs.
• Removal of the ‘climate change levy exemption’ may end subsidies for community renewable energy projects.
• A levy on large employers will be applied and used to fund 3 million new, high quality apprenticeships. This will have an impact on larger charities.
• Military charities and other good causes will receive nearly £70 million worth of additional support through the use of banking fines.