Budget 2013: Enable charities to support public sector services
As part of a series of blogs previewing Budget 2013, Tracey Johnson, partner in Moore and Smalley’s charities team, offers her thoughts on what the chancellor can do to support the sector.
This is a crucial time. The chancellor must take steps that will continue to boost confidence in the private sector and stimulate investment. Hopefully, lessons will have been learned and we will not see measures that have not been properly thought out and are so controversial that they are subsequently retracted.
From a charity and not-for-profit perspective, the chancellor needs to deliver tax reliefs for charitable giving and/or social investment to incentivise the public to fund the sector. With this sort of financial support, it could deliver many services that were previously carried out by the public sector.
Realistically, there is unlikely to be much for the charity sector that we don’t already know about. For example, new Gift Aid reliefs are already set to come in from April 2013.
As part of the Olympic legacy, fresh measures will probably be introduced to enable more local sports clubs to register as community and amateur sports clubs and benefit from charity-related tax breaks.
There is so much more the chancellor could do to help charities. VAT is onerous for many charities – as both a cost and administrative burden.
The chancellor would win many friends in the sector by simplifying the VAT system. Many charities are partially exempt and this makes them subject to very complex rules, with huge potential for error.
But since VAT is essentially a European tax, the scope to change things in the UK is limited. The recent cost-sharing legislation is intended to help charities to save VAT costs, but in practice the system is too complicated for most charities to take advantage of.