Budget announcements relating to charities

22 November 2017

The Government is avoiding difficult and costly issues

They do not want to spend any money so instead have agreed to publish a green paper/a strategy at some point in the future. Examples of this include the plans to come up with a green paper (a discussion document) on care and support for old people by summer 2018. This was announced on 16 November however there was no mention in the budget.

On the same day the government announced plans to develop a civil society strategy. There was no mention of a green paper but findings will be reported later in 2018. Similarly, there was no mention of civil society in the budget.

On the National Minimum Wage

Many social care providers have been hit by the HMRC approach to sleep-ins. This is where an allowance is paid for staff sleeping in at a care home and therefore being available to be called out. The NMW was not designed for these circumstances and it has taken some time for the unions, employers and the Government to decide how it should apply. HMRC has changed their approach completely and is now insisting that back pay for the last 6 years is due. The bill of £400m for social care charities may well cause some to become insolvent.

Charity Auditors are not an extension of the regulator

They are appointed by charities to provide independence. However, a guide issued today by the 3 UK charity regulators makes clear that in addition to areas that auditors must report there are a wide range of matters that auditors are encouraged to report upon. Their time is in effect paid for by the charities in their audit fees. Meanwhile calls from the sector for improved funding for the Charity Commission went unheard by the Chancellor.

The charity sector is subject to unintended consequences

VAT thresholds are higher than in Europe and the Government would like to reduce them, to increase the tax take. White van man would no longer be able to do jobs for cash. This also affects charities, who are also often under the threshold of £85,000 as work funded through donations is outside the scope of VAT. If the threshold is reduced some charities will have to register and will suffer the additional compliance overhead associated with VAT.

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