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Budget 2018: How will it impact charities?

The Autumn Budget brings some good news for the Charity sector. Charities will be able to generate more non-charitable trading income of up to an increased threshold of £80,000. This threshold has remained at £50,000 for many years.

From April 2019, the small scale trading exemption threshold applicable to most charities will be increased from £50,000 to £80,000. This will be welcome news for many charities across the sector as it allows greater flexibility to generate small amounts of income from miscellaneous activities without having to report a taxable source of income and without having to consider restructuring the charity’s operations. In essence, this will gives charities so much more scope to engage in periphery charities activities that support them in achieving their overall mission.

The maximum individual donation limit under the Gift Aid Small Donations Scheme will also be increased from April 2019, from £20 to £30. This will give more flexibility to charities with small collections and brings the limit in line with the payment limit for contactless card payments.

Other announcements for the charity sector include a relaxation of the paperwork requirements for charity shops using the Retail Gift Aid Scheme, as well as an increase in funding for charitable organisations including schools, air ambulance trusts and Armed Forces organisations. This is expected as every year the Government generally highlight new areas they’re going to support, mostly because they’ve been highlighted as neglected areas and the Government wants to win public support. Nevertheless, this will come as welcome news to these organisations in these sectors.  

Although previously announced, the draft Finance Bill also includes changes to Gift Aid donor benefit thresholds which will come into effect from April 2019. Donor benefit thresholds will be simplified to a two-tier system: 

  • 25% limit for the first £100 of a donation and 
  • An additional 5% of any amount exceeding £100

This change ultimately applies a more generous limit (where the donation is over £100) to the value of benefits that can be given by charities back to donors, which will be a welcome change particularly for charities operating membership or friends schemes.

Also, not specifically related to the charity sector but will nevertheless benefit some charities. The Budget also announced a cut in business rates for retail properties and a reduction in the co-investment rate for apprenticeship training. This will help those charities that use separate entities to help run their charity stores and also those that employ apprentices. 

Read our full Budget 2018 overview here.

You might also be interested in… Budget 2018: What do I need to know?

According to the Budget 2018 document, “the Government is committed to keeping taxes low…. and to provide businesses with an environment in which they can grow and create jobs”. It was with the usual cheers and jeers that the Chancellor delivered his Budget speech and it was with the usual scrutiny that we discovered the detail once he sat down. Our legislation is about to explode once more.

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