Budget round-up: a mixed bag for charities

Progress on tax reliefs and social investment wholesale bank, but no movement on Gift Aid or substantial donor legislation

Chancellor's briefcase
Chancellor's briefcase

A possible easing of VAT restrictions for charities sharing back-office functions, progress towards a social investment wholesale bank and an extension of tax relief on charitable giving between EU countries were among the announcements made in today's Budget.

There was also  additional support for community lenders, such as community development finance institutions, and a pledge to increase by 15 per cent the volume of central government contracts carried out by small and medium-sized enterprises, a definition expected to include third sector organisations.

A scheme to increase the use of social impact bonds, announced last week, has also been expanded. Social impact bonds reward investors in community projects with government payouts based on their success.

The Chancellor, Alistair Darling, also signalled his support for the international community to develop a  tax on banks transactions, known as the Robin Hood tax.

"More countries now agree on the need for an international systemic tax on banks," he said. "I agree with all those who think that such a tax should be internationally coordinated. Going it alone would cost thousands of jobs, not just in London, but across the country."

But there was no announcement on Gift Aid, other than to point out that a working party is developing a report for ministers that is expected to be completed in September. There was no mention of whether or not transitional relief would be extended until April 2011.

There was also no firm announcement on reform to substantial donor legislation, apart from a reiteration of the Government's intention to replace the current rules. The legislation was introduced to try to stop wealthy people obtaining advantages by making donations to charity, but has proved too complex to implement.

Darling also announced that there would be no additional increase to national insurance above the already announced one percentage point rise that will come into effect in April 2011. VAT will also remain unchanged.

Read Charles Nall's blog on the Budget.


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