It’s good news to see the charity sector feature more
prominently in a budget speech, as well as a raft of new tax reliefs.
It looks like a tale of two sectors, however. Those which
rely on donations will profit from new tax reliefs estimated to be worth over
£500m a year. But those who get their income from government grants and
contracts – arguably the hardest hit group in the current climate – are not
sitting so pretty.
Osborne has been particularly generous to organisations
which rely on a small number of major donors. He’s promised an increase in the
level of benefits charities can offer major donors, together with a more
generous inheritance tax threshold for people giving 10 per cent of their
assets to charity. Perhaps the biggest winners here will be arts organisations,
who have been sorely in need of good news in recent months.
At the other end of the scale, the ability to claim Gift Aid
on £5,000 of small donations with reduced paperwork will help many smaller
organisations. It also makes shaking a tin on the high street a much more
attractive proposition, as these donations can now potentially attract Gift
Aid. A new system to claim Gift Aide online will benefit all sizes of charity,
but particularly the smallest.
There is, of course, still a lot of detail still to be
hammered out on all of these changes. Anti-fraud measures could yet be
introduced for the small donations rule which will make it less attractive.
HM Revenue & Customs has previously resisted extremely
strenuously any calls for a “de minimis” limit like the one proposed, so it has
clearly happened because of strong political pressure from above. Unless top
politicians remain vigilant, HMRC are unlikely to allow a limit like this to be
introduced without hedging it around with caveats and restrictions.
It’s service delivery charities I feel a bit sorry for,
however. Smarting from the loss of government grants and contracts, they’ve
received little relief. An extra £7m for the Transition Fund, announced earlier
this week, won’t go far. These charities will just have to wait hopefully for
Eric Pickles to announce sanctions on councils who’ve made “disproportionate”
cuts to the sector.