Budget 2018

The Chancellor of the Exchequer, Philip Hammond, presented his Budget to Parliament on 29th October 2018 which included the following measures intended to reduce the administrative burdens on charities:

  • Small trading tax exemption limits which apply to non-primary purpose trading will increase from £5,000 to £8,000 where turnover is less than £20,000 and from £50,000 to £80,000 in cases where turnover is more than £200,000. These increases will be introduced from 6th April 2019 for unincorporated charities and from 1st April 2019 for incorporated charities.
  • The individual donation limit under the Gift Aid Small Donations Scheme will be increased from £20 to £30 in line with the maximum amount that can be paid using contactless payment.
  • Retail Gift Aid Scheme used by charity shops will be changed to allow charities to send letters to donors every three years where a donor’s total donations in a tax year are less than £20, rather than every year as has previously been the case.

The Budget document also announced several new funding pots which will total £44.7m and will benefit the following types of charities:

  • £10m in funding for air ambulance trusts.
  • £8m in funding for the repair and refurbishment of village halls and facilities run by miners’ welfare facilities and armed forces organisations.
  • £10m in funding to support veterans’ mental health projects, marking the centenary of the end of the First World War and £1.7m to provide educational projects in schools about the Holocaust.
  • £15 million in funding to charities to distribute surplus food in a bid to tackle food waste.

Another measure announced that will be of interest to large and medium-sized organisations is the change to the off-payroll working rules in the private sector which will be implemented from April 2020. Responsibility for operating the rules and deducting tax and NICs will shift from individuals to the organisations paying an individual’s service company. Small organisations will be exempt. The Treasury estimates that a third of contractors paid via personal service companies and claiming self-employed status are actually employees and have therefore been paying less tax and NICs. 

Although a more positive vision has been set out for charities in this year’s Budget compared with previous years, ACEVO in particular, criticised the Chancellor for being ‘out of touch’ with the sector with ‘scattergun announcements about specific pots of money for specific causes’.

The law and practice referred to in this article has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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