Budget 2021: Charities and not-for-profits

Published by Sam Rouse on 27 October 2021

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An optimistic Autumn Budget and Spending Review based on UK investment, backed by a positive economic backdrop reported by the OBR, gave the Chancellor the ability to address some short-comings in society when thinking about the Charities and not-for-profit sector.

The Chancellor’s mandate of making a stronger economy to make a real difference to people’s lives will be welcomed by many, specifically the charity and not-for-profit sector.

Pushing aside the business aspects of investment in infrastructure and encouragement of UK based research and development which focussed heavily in the Chancellor’s speech, there was some attention given to the Charity and not-for-profit sector which is very welcomed.

The sector governing body, the Charity Commission is one of the smaller departments featured in the spending review.

As can be seen from the table, the good news is that planned spending is higher in each of the next 3 years to 2024/25 than the outturn for the last 2 years and the current year baseline figure. The bad news is that planned spending in 2023/24 and 2024/25 is lower than for 2022/23.

The Charity Commission figures were:

Outturn 2019/20             £24.9 million

Outturn 2020/21             £26.9 million

Baseline 2021/22            £28.3 million

Plans 2022/23                 £29.8 million

Plans 2023/24                 £29.0 million

Plans 2024/25                 £29.3 million

Reforms to social care, an increase to local government funds over the next 3 years, investment in education are all good news together with the focussed support announced of £639bn for rough sleeping and homelessness, £560m in youth services and £205m to transform community pitches across the UK.

To ensure that servicemen and women who have been injured in service of their country get the support they need, the government will provide an additional £5 million in 2022-23 for research into numerous injuries suffered by veterans. The new fund will be administered by the Office for Veterans’ Affairs (OVA) in the Cabinet Office, working with the Department of Health and Social Care (DHSC), the Ministry of Defence (MOD) and in collaboration with the charitable sector where appropriate. Further details will be announced in due course.

Support for the long-suffering culture sector will undoubtedly be gratefully received and push open the door to enable sustainability through the temporary increase to the rates of tax relief for theatres, museums, orchestras, and galleries across the UK to March 2024. This will continue the government’s support for charitable companies to put on high-quality museum and gallery exhibitions.

Returning to the overarching mandate of the Chancellor’s Autumn Budget of making a real difference to people’s lives, the National Minimum Wage will increase from £8.91 to £9.50 per hour, for those aged 23 or above which will put additional strain on annual budgets for Charities where fundraising activities are yet to re-commenced in earnest, however, this may reduce the number of people needing help from the charitable sector.

To alleviate the increase in the National Minimum wage, the business rate reform, which promises a 50% rates reduction for 1 year, targeted at retail, hospitality and leisure should benefit those charities with high street shops and may go some way to counterbalance the additional costs to be incurred.

Join our Budget question time – Connecting the dots webinar on Friday 29 October, where our panel of tax and finance experts will be on hand to answer your Budget related questions.

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