What does the Chancellor’s 2021 Budget mean for charities?

In light of the Coronavirus pandemic, the 2021 Budget disappointingly overlooked charities. Despite calls by the sector for emergency funding and gift aid reform, the Chancellor focused on the economy’s recovery plan and job security.

Charities have been significantly affected by the pandemic with many diversifying their fundraising activities to enable them to sustain the future delivery of their charitable objectives.

A small glimmer of hope can be relished through the welcomed extension of the Coronavirus Job Retention Scheme (CJRS) which will enable the continued employment of workers, who are crucial to the fundraising efforts of many charities and will once again, hopefully be able to open the doors of the charity shops that adorn our High Streets soon. However, with the future unwinding of the Scheme requiring employer contributions, coupled with the planned increase of the National Living Wage to £8.91, this will affect future cashflow demands of many charities.

It is therefore essential now more than ever that Trustee Boards invest time in planning for the medium term to ensure they continue to be viable and continue to provide benefit to the communities and causes they represent.

There were a number of business-focused support packages announced for which, the question to be answered when the detail is unpacked is, “will trading subsidiaries be eligible to take advantage of any of these?” smaller charities would welcome the opportunity to take advantage of the ’Help to Grow Digitally Scheme’ to name but one.

The freezing of many thresholds including Inheritance Tax, personal allowance and income tax could offer a little bit of respite for Charities as potential donors may see this as an opportunity to leave a charitable gift in their will or donate to mitigate exposure to tax.

The main updates that will (or might) benefit the charitable sector are as follows:

• Armed Forces charities – £475K will be provided to support the development of a digital and data strategy.
• Armed service veterans – an additional £10m to the Armed Forces Covenant Fund to support veterans with mental health needs.
• Domestic abuse – a further £19m will be provided to help tackle domestic abuse. £15m represents increased funding for perpetrator programmes that work with offenders to reduce risk of abuse continuing, and £4m will be used to trial a ‘Respite Rooms’ network. This network will provide support to severely disadvantaged homeless women. This funding is on top of the £125m that has already been pledged to deliver the Domestic Abuse Bill’s new duty to support victims.
• Statutory Sick Pay (SSP) Rebate Scheme – a continuance of the temporary COVID-19 measure enables all small and medium-sized employers being able to reclaim up to 2 weeks of eligible SSP costs.
• Culture Recovery Fund – provision of £300m to support key national and local cultural organisations. £1.57b lifeline to cultural organisations hard-hit by the pandemic.
• National Museums and cultural bodies – £90m for government sponsored National Museums and cultural bodies.
• Sport Recovery Package – £300m for continued support to major spectator sports, supporting clubs and governing bodies.
• Social Investment Tax Relief (SITR) extension – continued support for social enterprises that are seeking growth investment by extending the scheme until April 2023.
• Coronavirus Job Retention Scheme (CJRS) extended to September 2021.

We will be regularly updating the Budget pages of our website. If you would like to discuss the implications, please don’t hesitate to get in touch. Alternatively, book your place on our Budget question time webinar on Friday 5 March 2021 to find out more.