Autumn Statement 2016 - Charity issues
A number of issues arose that may be of interest to the charity sector.
As already announced, intermediaries will be given a greater role in administering Gift Aid, simplifying the Gift Aid process for donors making digital donations. This should particularly help with giving via on-line platforms. For example, at present one has to give a donation to a specific charity and sign a Gift Aid declaration with them direct. Following these changes one will, in theory, be able to make a donation, which can then be dispersed to a number of charities, but under a single Gift Aid declaration.
Social Investment Tax Relief (SITR)
Under Social Investment Tax Relief (SITR), individuals making an eligible investment can deduct 30% of the cost of their investment from their income tax liability, either for the tax year in which the investment is made or the previous tax year (if 2014/15 or later). The investment must be held for a minimum period of three years for the relief to be retained. There are also Capital Gains Tax Reliefs.
The organisation receiving it must meet certain criteria:
- Organisations must have a defined and regulated social purpose
- Charities, community interest companies or community benefit societies must carry out a qualifying trade
- The organisation must have gross assets of no more than £15 million
Under EU rules governing the initial introduction of SITR, individual enterprises can only receive a certain amount of government subsidised investment. The limit is €344,827 (about £293,000) over three years. The exact sterling equivalent is the spot exchange rate on the date of investment. From 6 April 2017, the amount of investment that social enterprises aged up to seven years old can raise through SITR will increase to £1.5 million. Certain activities, including asset leasing and on-lending, will no longer be treated as eligible trades. Investment in nursing homes and residential care homes will also be excluded initially, however the Government intends to introduce an accreditation system to allow such investment to qualify for SITR in the future. The limit on full-time equivalent employees will be reduced to 250.
Museum and Galleries Tax Relief
The scope of the Museums and Galleries Tax Relief will broaden to include permanent exhibitions so that it is accessible to a wider range of institutions across the country. The rates of relief will be set at 25% for touring exhibitions and 20% for non-touring exhibitions and the relief will be capped at £500,000 of qualifying expenditure per exhibition. The relief will take effect from 1 April 2017, with a sunset clause which means the relief will expire in April 2022 if not renewed.
To discuss this further, please contact David Hadley or another member of the Mercer & Hole team.
Date: 25th November, 2016
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