Towards the end of November, the Chancellor released the Autumn statement and similarly to Brexit and all previous budgets, the third sector was keen to know how it would affect charities and social organisations.
It has been announced that charities are expected to receive an extra £60m in gift aid over the next five years as a result of changes set out in the Autumn Statement; museums and galleries are also predicted to receive a further £125m of funding.
However, as with most statements there is always a sense of anticipation and sometimes, scepticism. It was announced, that aid spending is set to take a cut of £290m following weaker than predicted GDP figures.
What changes will the third sector see?
While elements of the statement benefit the third sector, there are some changes which could pose challenges for charities:
Changes in gift aid have been predicted to come about as a result of changes to digital intermediaries’ being able to claim gift aid on behalf of charities and social organisations – a measure which has been widely talked about but has now been consulted on.
There is also likely to be an affect on gift aid as a result of amendments to the Gift Aid Small Donations Scheme, allowing charities to claim a gift-aid like relief on cash donations with or without accompanying paperwork.
Social Investment Tax Relief
The government has stated it will be changing the criteria for social investment tax relief – this relief allows investors in asset-locked bodies (including charities) to claim 30% relief against income tax, however this is dependent on certain commitments being met.
Charities and social organisations will now be able to take on £1.5m of investment, as apposed to £1m, this move will benefit smaller charities as only those with fewer than 250 employees with qualify for the relief, as opposed to the 500 employee cap previously.
Costs will rise
The statement was also filled with a basket of cost rises for the third sector following the budget. The national Living Wage will increase, National Insurance contributions and insurance premium tax is also set to rise. This will make it more expensive for charities to do business and run on a day to day basis.
Aid spending remains fixed at 0.7% of the gross national income, however, due to Brexit the government is predicting a slower growth rate and if this comes to fruition, £290m less will be spent on aid.
2017 is shaping up to pose a number of challenges for charities, but amongst these there are opportunities ready for the taking.