16th March 2016 at 5:31pm
Today’s Budget contained positive funding news for a range of charities, both household names and local grassroots voluntary organisations. Military charities and women’s charities were once again sectors to benefit. Preventing homelessness was singled out as an area to receive a considerable injection of funding, including a boost for Rough Sleeping Social Impact Bonds.
Here’s a summary of the key announcements for charities.
Use of banking fines
The Budget report named 30 charities which are to benefit from a share of £45 million raised through banking fines over the next 4 years (see page 93 for the full list). A number of charities will receive more than £1 million, including the provision of air ambulance facilities.
Funding for charities supporting women
Following on from the initial announcement of £5 million earmarked for women’s charities in the last Autumn Statement, 19 charities were named as recipients of £12 million of funding from the so-called tampon tax fund. This includes two large payments of £1 million for each of Girlguiding and Breast Cancer Care. At a more local level, Comic Relief and the Rosa Fund will be involved in further grant-making activity to distribute funding across a wider range of grassroots women’s groups across the UK.
Pension money left to a charity
The Government has announced it wants to remove unnecessary legislation relating to charity lump sum death benefits from the pensions rulebook. We await the publication of the Finance Bill to see what this entails and whether it removes the 45% tax charge which can still apply in some cases when pension money is paid to a charity after someone dies.
Digital Gift Aid
Measures to make Gift Aid easier to administer online are also expected in the Finance Bill, which reflects the popularity and ease of digital gifting
Inheritance tax receipts due to increase more quickly
As mentioned in my pre-Budget blog, projections for inheritance tax receipts were already expected to increase in the years ahead. This Budget has seen the increase being accelerated from the current tax year onwards. Inheritance tax is now forecast to raise £4.6 billion in 2015/16.
The exemption from inheritance tax for money or assets left to a charity is therefore important to keep in mind. Interestingly, figures show an upward trend in the number of estates claiming exemption from inheritance tax using this charity exemption, from 7,488 estates in 2010/11 to 8,372 estates in 2012/13. 1,558 estates in 2012/13 also made use of the new 36% inheritance rate, which applies where 10% or more of the value of an estate is left to qualifying charities. For charities looking at potential sources of future funding, it’s clear there are thousands of UK taxpayers willing to benefit charities via this route.
For other updates on Budget 2016, keep an eye on the moneyplus blog.
The information in this blog or any response to comments should not be regarded as financial advice. Laws and tax rules may change in the future. Standard Life is not responsible for the content of external websites. The information here is based on our understanding in March 2016.