Autumn Budget 2017: Impact on charity sector

While it was an interesting Budget, not a great deal directly impacted the charity sector. We have summarised some of the key announcements including those concerning donor benefit rules for Gift Aid.
Gift Aid – Simplification to donor benefit rules 

The Gift Aid rules on the maximum value of benefits donors can receive “as a consequence of” their donation has always been complex for charities to administer. Particularly under “Friends of..” and other similar supporter schemes, it is common for donors to receive a small level of benefits such as discounts at shops. The level and value of benefits to the donor can be difficult to measure. Following a long consultation period, we are pleased the Government has now announced a simplification with the withdrawal of one of the current thresholds from 6 April 2019. 

The mix of monetary and percentage thresholds will be replaced with two percentage thresholds:
  • The benefit threshold for the first £100 of the donation will remain at 25% of the amount of the donation; and
  • For larger donations, charities will be able to offer an additional benefit to donors of up to 5% of the amount of the donation that exceeds £100 with the overall maximum remaining at £2,500.
For example, the level of benefits for an annual donation of £500 is currently restricted to £25 but from April 2019 the permissible value of benefits will increase to £45 (£25 plus 5% of the excess over £100).

Other key announcements affecting charities
  • National Living Wage: For those aged 25 and over the National Living Wage will increase from £7.50 per hour to £7.83 per hour from April 2018. Over 2m people are expected to benefit. For a full-time worker, it represents a pay rise of over £600 a year.
  • Tax-free personal allowance: Will rise with inflation to £11,850 from April 2018 meaning the amount you earn before you start paying Income Tax will rise from £11,500 to £11,850. This means that in 2018-19, a typical taxpayer will pay £1,075 less Income Tax than in 2010-11.
  • Apprenticeship levy: The Government will continue to work with employers on how the apprenticeship levy can be spent so that the levy works effectively and flexibly for industry, and supports productivity across the country
  • VAT: It is welcome news that the VAT registration threshold will remain unchanged at £85,000.
  • Cultural Development Fund: Supporting the role culture plays in regeneration and local growth, the Government will provide £2m funding to the Department for Digital, Culture, Media and Sport for place-based cultural development.
  • Banking fines: A further £36m of banking fines over the next three years committed to support Armed Forces and Emergency Services charities and other related good causes. This completes the LIBOR Charity Funding scheme, bringing the total of funding committed since 2012 to £773m.
Housing & welfare
  • Households applying for Universal Credit will get more upfront support. Claimants will be eligible for Universal Credit from the day they apply, rather than after seven days. Housing Benefit will continue to be paid for two weeks after a Universal Credit claim.
  • Low-income households in areas where private rents have been rising fastest will receive an extra £280 on average in Housing Benefit or Universal Credit.
  • Rough sleeping: The Government has committed to halve rough sleeping by 2022, and to eliminate it by 2027, by the launch of the Homelessness Reduction Taskforce.
  • The Government will invest £28m in three Housing First pilots in Manchester, Liverpool and the West Midlands, to support rough sleepers with the most complex needs to turn their lives around.
  • Planning for new homes and housing investment: investment includes new garden towns in high demand areas such as the South East
Educational charities
  • The Budget announces support for maths and computer science, given its crucial role in preparing the next generation for jobs in the new economy. Schools will get £600 for every extra pupil who takes A-level or Core maths.
  • £27m will help improve how maths is taught in 3,000 schools and £49m will go towards helping students resitting GCSE maths.
  • £350,000 of extra funding a year will be given to every specialist maths school that is set up across the country.
  • The number of fully-qualified computer science teachers will also rise from 4,000 to 12,000.
  • A commitment to ensure every secondary school has a fully qualified computer science GCSE teacher by pledging £84m to upskill 8,000 computer science teachers by the end of the Parliament.

Further information on the impact of the Budget can be found here.
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