Budget 2021: Response For Charities
I believe we all expected the Budget to focus on Covid-19 and the economic recovery, I was surprised by the lack of specific support designed to help the Charity sector. There were however some announcements that will make a positive impact on the sector which I will break down below in order to ensure proactive steps are taken:
Furlough Scheme
If you have employees on furlough the good news is the government has extended the 80% furlough scheme until June 21. In July business will be asked to contribute 10% while the government will pay 70% and then from August businesses will be asked to pay 20%. The scheme was designed to protect the jobs and livelihoods of the British people and the scheme will be extended until the end of September.
National Living Wage
The national living wage for over 23 will rise to £8.91 from 1 April 2021.
VAT
VAT registration threshold will remain at £85,000 until 2024 (yes 3 more years) so if you have a trading subsidiary getting close to the £85,000 turnover, you have to factor in registering for VAT - this could potentially add costs. It goes without saying that if your charity’s taxable turnover is more than £85,000 then you must register the charity for VAT.
Charites running a café or restaurant and registered for VAT can continue to apply 5% reduced rate vat om sales until 30 September followed by 12.5% for another six months. The Chancellor also announced that the government will provide ‘Restart Grants’ in England of up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality.
Levelling up and empowering all UK communities
The following new funds are expected to fill the gap left by EU funds:
UK Community Renewal Fund
The government is launching the prospectus for the £220 million UK Community Renewal Fund alongside Budget. This will support communities across the UK in 2021-22 to pilot programmes and new approaches as the government moves away from the EU Structural Funds model and towards the UK Shared Prosperity Fund. Funding will be allocated competitively. To ensure that funding reaches the places most in need, the government has identified 100 priority places based on an index of economic resilience to receive capacity funding to help them co-ordinate their applications.
- Community Ownership Fund
The government will create a new £150 million Community Ownership Fund to help ensure that communities across the UK can continue to benefit from the local facilities and amenities that are most important to them. From the summer, community groups will be able to bid for up to £250,000 matched funding to help them to buy local assets to run as community-owned businesses. In exceptional cases up to £1 million of matched funding will be available to help establish a community-owned sports club or buy a sports ground at risk of loss from the community. This will help ensure that important parts of the social fabric – like pubs, sports clubs, theatres and post office buildings – can continue to play a central role in towns and villages across the UK.
Help To Grow - Digital
In a report from the Lloyds Bank UK Business Digital index, it was revealed that more than 100,000 charities lacked basic digital skills, which is over half of the charities registered in the UK.
A scheme that may help with this is the “Help to Grow” (Digital) –a new UK-wide scheme in the autumn to help 100,000 SMEs save time and money by adopting productivity-enhancing software, transforming the way they do business. This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform.
In a recent webinar – I show you how different technologies can help you to improve every aspect of your charity. From your accounting to productivity and fundraising, discover how to embrace technology at a time where it is more important than ever before, you can check it out here.
Contactless Payment Card Limit - Increased
Single contactless payments up to £100, and cumulative contactless payments up to £300, will be permitted without the need for customers to input their chip and pin.
This will be a big help to the charity sector regarding increasing their contactless fundraising totals.
Corporation Tax
Corporation tax rate increase to 25% in 2023. This should not be cause for concern for charities with trading subsidies. Trading subsidiaries will have to pay corporation tax on profits however if the profits are gifted to the parent charity then the trading subsidiary will not have profits to pay corporation tax.
Relief for certain imported goods
In April 2020, the government introduced relief for imports of items of medical equipment, COVID-19 testing kits, medicine, and PPE for use by state organisations and charities or philanthropic organisations in tackling the pandemic. This relief enabled such goods to be imported from outside the EU free of customs duties and VAT. It was backdated to apply from 30 January 2020, when the World Health Organisation declared COVID-19 a ‘Public Health Emergency of International Concern’ and ended on 31 December 2020. Since 1 January 2021, tariffs on medical products used to help fight against coronavirus have been suspended by the government in the fight against the pandemic, lowering costs on these critical items for organisations across the UK.
Armed Forces charities
The government will provide up to £475,000 to Armed Forces charities in 2021-22 to support the development of a digital and data strategy for the sector. This will improve the ability of charities to work together and with the government. This funding will help to ensure that members of the Armed Forces community across the UK can access the support they need and when they need it.
Charities Support Package
Support for charities totalling £750 million, which includes £60 million for the devolved administrations through the Barnett formula.
If you have any questions on how the Budget will impact your business, please don’t hesitate to get in touch.