VAT relief and works of art feature in autumn statement

Tax exemption for charities sharing back-office functions likely in April next year

Chancellor George Osborne
Chancellor George Osborne

VAT relief on charities that share back-office functions and measures to give tax breaks to people who donate "pre-eminent works of art" to the nation were the main announcements affecting voluntary sector organisations in today’s autumn statement. 

Documents released as part of the statement indicate that the government will introduce the VAT exemption in April 2012, having run a consultation earlier this year.

Most companies are able to charge one another for services without incurring a tax liability because they are able to recover VAT, but charities usually cannot recover all their VAT and have to pay tax on any services they buy from another charity.

The documents also say the gifts of pre-eminent works will also be introduced in April next year, in the wake of another consultation that took place after the Budget in March this year.

The total sum of money available for people donating pre-eminent works of art to the nation has increased from the proposed £20m to £30m a year, the documents say.

Another measure likely to affect some charities includes a call for evidence on the effectiveness of the Transfer of Undertakings (Protection of Employment) Regulations, or Tupe, in areas including protecting employee rights, which could lead to a formal consultation in 2012.

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