Budget 2012: Charities relegated by Chancellor, says charity ...

This year, unlike the last which saw the announcement of a number of charity-specific provisions, the Chancellor?s speech delivered only a fleeting reference to the sector. So has our political capital diminished as ?big society? slips further down the agenda? One could be forgiven for thinking so.

The only reference in Osborne?s budget speech to charities was in the context of applying a cap to tax relief. The budget document did, however, outline a number of proposals relevant to charities, but disappointingly many of these measures were reiterations of previous government commitments. With so many continuing to experience difficulties in the UK, charities and social causes must not be left behind. This budget left a sinking feeling that charity is being forgotten as a contributor to the UK economy.

Pre-budget we highlighted a number of areas where the Treasury could improve the tax and regulatory framework for charities, many of which would also benefit social enterprise and small to medium-sized business. The Chancellor pledged to prioritise a fairer, more efficient tax system but has failed to consider charities in this endeavour.

The Chancellor caused alarm when he referenced the government?s plan to introduce a limit on all uncapped income tax reliefs, including those related to charitable giving. As we understand it, this will mean that a cap applies when the relief being claimed equates to ?50,000 or 25% of the individual?s income, whichever is the higher. However, there is a lack of clarity on what impact it will have on giving.

While the budget promises that government will ?explore with philanthropists ways to ensure that this measure will not impact significantly on charities that depend on large donations,? we are left wondering what effect it will have.

Because this measure applies to all tax reliefs, many high net-worth individuals are likely to have reached their limits with their investments before they even think about charitable giving. This could be a devastating blow to philanthropy and we need proper consultation and an impact assessment.

The government also said that it will work with the charity retail sector to simplify the administration of Gift Aid for charity shops ? although it does not supply any further detail. Measures that reduce complexity and ease the financial cost of compliance would be most welcome.

From April 2013 government will relax the Community Investment Tax Relief (CITR) ?on-lending? requirements, which currently place conditions on the speed with which community development finance institutions must ?on-lend? the funding they receive. New rules to allow investors to carry un-used relief forward will also be introduced. This is a promising development albeit a very small one.

It was perhaps surprising that social investment did not feature more heavily. The budget document states that the Treasury will conduct an internal review on social investment and the financial barriers to social enterprise. The development of new and varied funding mechanisms is essential and has been a priority for some time. It is promising that time and resource is being invested but we are keen to see the government nurturing this evolving market and not just paying lip service to it.

The government will also withdraw charitable buildings from the scope of the VAT reduced rate for the supply and installation of energy-saving materials.

As indicated by Treasury chief secretary Danny Alexander, the government has pledged ?20m of funding for the not-for-profit advice sector in 2013-14, and again in 2014-15, to ?support the sector as it adapts to changes in the way that it is funded?.

Government also reiterated its commitments to:

? Provide a lower rate of inheritance tax of 36% where 10% or more of a diseased person?s net estate is left to charity

? Provide reductions in tax liability where a taxpayer donates a pre-eminent object to the nation

? Amend community amateur sports clubs legislation

? Withdraw self-assessment donate for tax returns 2011-12 onwards

? Introduce the VAT cost sharing exemption

? Put in-year repayments of tax to charities on a statutory footing.

So, the overall verdict? Not a lot to support and develop social investment, very little new for charities and some distinctly worrying elements that we all need to keep a very close eye on.

Caron Bradshaw is chief executive of the Charity Finance Group

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Article source: http://www.guardian.co.uk/voluntary-sector-network/2012/mar/22/charities-relegated-budget-2012?newsfeed=true

Source: http://caregiverschristianministry.org/news/archives/10167

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