Budget update 2014

Yesterday’s budget included a number of announcements relevant to charities and social enterprises.

Government consults on proposed tax-avoidance measures

The Government has published proposed measures to prevent charities set up for tax avoidance purposes from being entitled to claim charity tax reliefs.

HM Revenue & Customs seems to have had difficulties with the drafting of these measures.  Currently there is no timetable for introducing them.

The Charity Finance Group has raised concerns that the measures in their current form may inadvertently capture legitimate charities set up as corporate or family foundations.

The deadline for comment is 11 April 2014.

Social investment tax relief rate

The Government has confirmed income tax relief of 30% will be available on investment by an individual under the social investment tax relief scheme from 6 April 2014.  This will enable social enterprises under the scheme to receive around £290,000 of tax-advantaged investment over three years.

The Finance Bill 2014 will include provisions for a range of reliefs from income tax and capital gains tax to encourage individuals to invest in social enterprises.  Draft legislation will be published on 27 March 2014.

Gift Aid on digital giving

The Finance Bill 2014 will allow non-charity intermediaries (e.g. text donation operators or websites) to have a greater role in administering Gift Aid.  This is designed to reduce the number of times a donor is required to make a Gift Aid declaration and to make it easier for charities to claim Gift Aid on digital giving.

The Bill will empower the Government to introduce regulations setting out in detail the roles and regulatory regimes for these intermediaries.  The Government will consult on the draft regulations once the Bill becomes law.

Encouraging charities to claim tax reliefs

The Government plans to carry out outreach work to encourage more donors to claim Gift Aid and smaller charities to register for the tax reliefs they are entitled to.  It has also announced that it intends to simplify the process of apply to register with both the Charity Commission and with HM Revenue & Customs.

Charity donor benefits

The Government intends to simplify the rules which govern the treatment of benefits which a donor may receive from a charity in connection with a donation.

For more information please contact Chris Hook using 0191 211 7801 or [email protected].