There were a number of announcements in the Autumn Statement specifically aimed at the charity sector, as well as some more general measures that might also be of interest to charities.
The scope of the museums and galleries tax relief announced at the 2016 Budget will be broadened to include permanent exhibitions. The rates of relief will be set at 25 per cent for touring exhibitions and 20 per cent for non-touring exhibitions, capped at £500,000 per exhibition. The relief will take effect from 1 April 2017 and will expire in April 2022.
As announced at that Budget, the Gift Aid process for donors making digital donations will be simplified where intermediaries are used and the Gift Aid Small Donations Scheme will also be amended, as previously announced. The government has committed a further £102m of banking fines over the next four years to support armed forces and emergency services charities and other related good causes.
Other announcements were not specifically aimed at the charity sector but will nonetheless be of interest to many charities. From April 2017 public sector employers must assess if a worker engaged is an employee, even if the contract is with the worker's personal or managed service company. If the tests are met, the engager must deduct PAYE and national insurance contributions from payments. These new rules will apply only to public sector roles from April 2017 and it is possible that if the public sector pilot works well these rules will be extended more widely in the future.
The long-established rules relating to termination payments will be updated from 6 April 2018. The first £30,000 of a termination payment will remain exempt from income tax and NIC, but employers' NIC is to be aligned with income tax: in other words, a maximum of £30,000 exempt. New rules will be simplified by making all payments in lieu of notice subject to income tax and NIC, whether contractual or not. These changes are likely to increase a charity's employment costs if termination payments are made after 5 April 2018.
Rates relief continues to be important to charities, as evidenced by statistics recently published by the Department for Communities and Local Government for England in 2015/16. Total business rates relief to charities (mandatory and discretionary relief) amounted to £1.6bn in respect of 2015/16, an increase of £82m. So it is worrying that in the same month the Northern Ireland Finance Minister has issued proposals for the reduction of business rates relief for charity shops from 100 per cent to at least 90 per cent. Apparently, if each charity shop was required to pay 10 per cent of its ratings bill, this would equate to about £15 a week for each one in Northern Ireland.
Draft governance code
The Code of Good Governance Steering Group has published a draft new code with the aim of strengthening charity governance. Comments are invited by 3 February. It is obviously focused on governance generally, but some areas are specific or at least more relevant to finance, such as requiring more information about a board's approach to balancing a charity's risks and opportunities, as well as the internal controls it has in place, and presuming that charities are open and accountable unless there is good reason not to be.
This would include a public register of trustees' interests, unless there is good reason not to, and charities explaining in their annual reports how they apply the code as well as an explanation of any aspects that they do differently.
Don Bawtree is lead partner for charities at accountants BDO LLP