The budget announced this week by Chancellor of the Exchequer George Osborne contains a number measures directly related to charity fundraising.
Most of these news measures are contained in ss2.91 to 2.97 of the Budget document published by HM Treasury yesterday.
UK Fundraising here presents a brief digest of these new measures (for a round up of all measures in the budget relating to charities, see NCVO’s blog).
Benefits received by charity donors (s2.96)
Perhaps the most significant new measure is the announcement that the government will conduct a review of the benefits allowed to donors – any item or service a donor receives in connection with a donation, such as entry to an event or magazine subscription – “with a view to simplifying existing rules”
HMRC rules on donor benefits present two methods of assessing the value of the benefit that a donor (or a person connected with the donor) may receive in return for making a donation.
Under the relevant value test, benefits are limited to:
- 25 per cent of the donations up to £100
- £25 for donations from £101 to £1,000
- 5 per cent of donations above £1,001 up to a maximum of £2,500.
If they pass the relevant value test, benefits are then assessed against the aggregate value test – benefits received by a single donor in a financial year must not exceed £2,500.
Institute of Fundraising: “We are mindful to ensure that any process of simplification does not have an inadvertent negative impact on charities being able to fundraise effectively using Gift Aid.”
Small charities and Gift Aid (s2.92)
The government says it will encourage more donors to use Gift Aid on eligible donations and encourage smaller charities to register for the reliefs they are entitled to. The Budget document says this will include “targeted outreach work” and a “simpler” joint HMRC/Charity Commission application process. It also says it wants to “improve understanding of donor behavior”.
Institute of Fundraising: “The introduction of targeted outreach work could help to get more charities involved in using Gift Aid and we look forward to working with the government on this to ensure that it can be as effective as possible.”
NCVO: “We’ve been concerned that the Gift Aid Small Donations scheme is too complex for many of those it’s targeted at to be able to claim. We called on the government to do more to support smaller charities so we’re pleased to see the announcement of an outreach team to help smaller charities get the tax reliefs they’re entitled to.”
Gift Aid on digital donations (s2.91)
The government has previously announced in the autumn statement that it would improve Gift Aid in the context of digital giving by allowing non-charity intermediaries to play a role in collecting Gift Aid and managing the declarations on behalf of charities.
The government has now confirmed it will legislate for this through the Finance Bill 2015.
Institute of Fundraising: “There is potential that this could create an easier and more efficient system for people who donate online or via their phones. However, the devil will be in the detail and it’s important that the right framework is put in place so that this works best for charities and donors.”
Charities Aid Foundation: “We are pleased the Government is committed to promoting and modernising Gift Aid, but we urgently need to see the detail. Changes must be far-sighted and ambitious, so that Gift Aid is truly fit for the digital age and charities can benefit from this generous tax relief on millions of text, online and mobile donations.”
- For more information on the government’s digital Gift Aid proposals, see this charity update from accountancy firm Shipleys.
Cultural Gifts Scheme (s2.93 and 2.94)
The Cultural Gifts Scheme enables UK taxpayers to donate important works of art and other heritage objects to be held for the benefit of the public or the nation. In return, donors receive a tax reduction based on a set percentage of the value of the object they are donating.
The Budget announced that the combined annual limit for the Cultural Gifts Scheme and Inheritance Tax Acceptance in Lieu scheme will be increased from £30 million to £40 million a year from 2014-15 (s2.93).
The Budget also confirmed the announcement made in the Autumn Statement, that there will be legislation – through the Finance Bill (2014) – to amend the Cultural Gifts Scheme in relation to Estate Duty (s2.94). The legislation will ensure that people who donate objects, on which there is potentially a charge to the Estate Duty, are not financially better off by donating the object under the CGS, than selling the object on the open market.
Grants for air ambulance and inland safety boat charities (s2.95)
More of the £100 million ring-fenced for charities from the Libor fines fund – as announced in the Autumn Statement – was announced in the Budget, extending it from military charities to emergency services charities.
Air ambulance charities will have access to a new five-year grant of £65,000 a year to cover the cost of VAT on fuel. This follows a review by the Treasury on the VAT that air ambulance charities incur on fuel.
Inland safety boat charities will also have access to a further five-year fund of £1 million per year to cover their fuel costs.
Osborne also announced in his Budget speech that, because the Libor fines fund “continue[s] to grow” that he was also making available £10 million for scouts, guides, and cadets, delivered through the Youth United Network, and St John’s Ambulance.
Last year, more than 150,000 people signed a government e-petition to refund VAT on fuel for air ambulances.
Community Amateur Sports Clubs (s2.97)
As announced at Autumn Statement, the government will legislate (Finance Bill 2014) to allow tax relief on gifts of cash from companies to Community Amateur Sports Clubs.
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