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Spring Budget 2021: How does the Spring Budget affect your charity or not for profit?

As expected, the Spring Budget focused mainly on supporting the economic recovery amidst the COVID-19 pandemic and it is reassuring to see that the charity and not for profit sector hasn’t been forgotten on this path to recovery. 

The last twelve months have demanded an incredible display of resilience from charities. You’ve found yourselves #NeverMoreNeeded yet placed in an increasingly difficult position to provide support. This budget, and the phased re-opening announcements from the Prime Minister, represent a welcome step in the right direction.   

To support you on this path, it’s vital that you continue to take full advantage of the funding and reliefs available to charities . Below, we've outlined the key measures announced in-support of the sector and what they really mean for you.

Public funding measures

Public funding measures 

A range of public support measures that will benefit many of you has been announced. These include: 

  • Restart Grants of up to £6,000 per premises for retail businesses and £18,000 for hospitality and leisure businesses 
  • £425 million of discretionary business grant funding for local authorities to distribute 
  • £700 million of further funding for the education sector to help young people catch up on lost learning 
  • A further £300 million to extend the Culture Recovery Fund and support cultural organisations in England 
  • £19 million to support victims of domestic abuse, £5 million to support the maintenance of zoos and aquariums, and £475,000 for Armed Forces charities 

These grants offer a kick-start opportunity to help your charity get back on track. 

Social Investment Tax Relief

Social Investment Tax Relief extended 

Social Investment Tax Relief (SITR), is a venture capital scheme that allows investors to make tax efficient equity and loan investments into social businesses and charities. Previously set to close in April 2021, this has been extended for a further two years to April 2023. SITR has been criticised in the past for having a low uptake, but with the impact of Brexit potentially removing the limitations of European State Aid rules on this scheme, SITR could be a substantial opportunity for charities and social enterprises in the coming two years.

Like the new public funding measures,  finding a loan investor able to take advantage of SITR could provide your charity with a cash-flow advantage, allowing you to tread the road to recovery in a stronger financial position. 

If you’re interested in finding out more about how the Social Investment Tax Relief scheme could benefit you, read our more detailed insight.

Read more about Social Investment Tax Relief

Employment measures

Employment measures 

The extension of the furlough scheme until September 2021  is another welcome relief from the government, allowing you to retain your valued staff and bring them back at a time that best suits the charity.  To further support you we've written a detailed insight with more information on the furlough scheme and the changes that come into effect in July 2021.

Find out more about the changes to the furlough scheme

No more delays have been granted to the introduction of the new Off Payroll working rules (IR35) which introduce new compliance requirements for public authorities and larger charities, and these rules will be coming into force on 6 April 2021 as planned. You should ensure you’ve got the correct systems in place before the new rules come into effect. 

Read more about IR35 and the information you need to know

Contactless limit increased

Contactless limit increased 

The contactless card payment limit has been increased from £45 to £100 per payment, which will be welcome news for those of you that collect contactless donations as part of your fundraising. This is nice timing given that the COVID-19 restrictions are lifting and in-person fundraising events may be able to be held again soon.  

Perhaps this change could also prompt a future increase in the single donation limit for the Gift Aid Small Donations Scheme, which had previously gone up in tandem with the contactless limit but has been stuck at £30 since 2019.

Retail, hospitality and leisure support extend

Retail, hospitality and leisure support extended 

Eligible charities in the retail, hospitality and leisure sectors will be pleased to hear that the 100% business rates holiday for these sectors has been extended to June 2021, with a further 66% business rates relief available until March 2022. 

The reduced 5% rate of VAT for these sectors has also been extended to September 2021, with a transitional reduced rate of 12.5% also applicable from October 2021 until March 2022. Again, these measures will support your cash-flow and ability to open in a stable financial position.

Corporation tax losses

Corporation tax losses 

The announcement that companies can carry back corporation tax losses against profits of up to the last three years, will be of benefit to those of you with trading subsidiaries that have become exposed to a corporation tax liability as a result of sudden losses caused by the pandemic, that’s rendered them unable to donate their earlier profits to their parent charity.

Get in touch
Have an enquiry about what the budget means for you? 

We are grateful to see various supportive measures to keep the charity sector running throughout difficult economic times. However, there are many important matters for the charity sector to keep on the backburner, such as reform of the discretionary charities relief for business rates and the Gift Aid donor benefit rules, and we hope to see action on these raised in a future Budget in greener economic times. 

If you're in need of support with any of the measures announced in the Spring Budget, complete the form below and one of our experts will be in touch.

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