With the vast majority of measures already being announced, and with very few sector specific announcements, there were no real surprises for the Not for Profit (NFP) sector in the 2017 Spring Budget.
Items with a NFP focus which were previously made public and will come into effect shortly include:
- Amendments to social investment tax relief (SITR) – whilst the government has increased the amount of investment which can be raised under this scheme to £1.5m from 6 April 2017, it has also introduced a number of restrictions. With the NFP sector becoming increasingly diverse, it is hoped that SITR will help charities raise much needed investment.
- Introduction of Museum and galleries tax relief – from 1 April 2017 both charitable and non-charitable companies which develop new exhibitions will be able to claim tax credits of up to £100,000 under this new relief.
However, the Chancellor reminded us that the NFP sector is due to be hit by a number of rising costs including:
- Increasing inflation – the consumer price index predicted to rise from 0.7% in 2016 to 2.4% in 2017 before decreasing gradually to 2.0% in 2019.
- Increase to the Living Wage – the Living Wage is set to increase by 30p to £7.50 p/h from 1 April. With much of the NFP workforce in typically low paid social care, this increase will have a large impact on the charity sector.
- Introduction of the Apprenticeship Levy – whilst this will only affect larger charities with a paybill of over £3m, from 1 April 2017 the levy will act as a further payroll cost if the organisation is unable to utilise its contributions for training.
- Increase to Insurance Premium Tax – this is due to increase by 2% to 12% from 1 June 2017. This increase follows last year’s increase from 9.5% to 10%.
- Increase to the Personal Allowance – for the seventh consecutive year the personal allowance will be increasing by £500 to £11,500 taking 1.3m taxpayers out of income tax altogether thereby reducing the amount of individuals who can opt for Gift Aid.
On a positive note, the Chancellor did announce some good news for women’s charities. A range of women’s charities will collectively benefit from £12m from the ‘Tampon Tax Fund’. Plus the government will be providing an additional £20m over the Parliament to support organisations working to combat domestic abuse.
Furthermore charities involved in R&D will be encouraged by the announcement that the Government are seeking to review the R&D tax regime. They will be hoping that the review will include the reintroduction of the Research and Development Tax Credit for non-university charities.
In conclusion, whilst the Budget didn’t contain many surprises, with increasing costs imminent, perhaps the Chancellor missed an opportunity to announce policies which could have helped support the NFP sector further.