The Budget 2021
The Chancellor delivered his Budget speech on 3 March, with an attempt to balance the need to continue providing support to those affected by the COVID-19 pandemic, whilst raising taxes to meet the substantial costs that have been incurred in doing so.
There were a number of measures announced that will be of interest to charities, including confirmation that the Coronavirus Job Retention Scheme was to be extended for a further five months to the end of September, although employer contributions will be required from July. Also announced was an extension of 100% business rates relief for eligible retail, hospitality and leisure properties in England through to 30 June 2021, followed by 66% relief for the period to 31 March 2022. There was no confirmation that business rates relief would be protected for charities though, and it is now hoped this will be announced as part of the government’s response to the Fundamental Review of Business Rates later in the year.
The 5% rate of VAT for goods and services supplied by the tourism and hospitality sector is also extended to 30 September 2021 and a rate of 12.5% will apply for the subsequent six months to 31 March 2022.
A package of restart grants will be made available in England, of up to £6,000 per premises for non-essential retail businesses and of up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gyms. In addition, local authorities are being provided with an additional £245 million of discretionary business grant funding which charities affected by the lockdown will have access to.
Some additional funding for charities was also announced. The Armed Forces Covenant Fund Trust will be provided with an additional £10 million this year to help deliver projects to support veterans with mental health needs. A further £475,000 is to be provided to Armed Forces charities to support the development of a digital and data strategy for the sector, better enabling them to work with government. An extra £19 million is also being made available to help tackle domestic abuse, focusing on offender rehabilitation schemes and a network of respite rooms to provide support for homeless women facing severe disadvantage. Other additional recovery funding announced will support cultural organisations, museums and zoos.
The government is also launching a UK Community Renewal Fund as part of the move away from the EU Structural Funds model and towards the UK Shared Prosperity Fund with an additional £220 million of investment for 2021/22. Funding will be allocated competitively, with a focus on those areas with the highest levels of economic hardship. A separate Community Ownership Fund is also set to be created with £150 million of funding, designed to ensure that communities across the UK can continue to benefit from the local facilities and amenities that are important to them. Community groups will be able to bid for matched funding so that they can buy local assets such as pubs, sports clubs and theatres and run them as community-owned businesses.
VAT registered charities that have taken advantage of the deferred payment arrangements that were available last year will no longer have to settle their obligations by 31 March 2021. Instead they can now opt to use the VAT Deferral New Payment Scheme and pay that deferred VAT in up to 11 equal payments. Payments can start from March 2021 and the earlier you opt-in the more instalments are available to help spread the cost. The registration threshold for VAT is to remain fixed at £85,000 until 2024.
Lastly the government is to continue to support social enterprises that are seeking growth investment by extending Social Investment Tax Relief (SITR) to April 2023, providing income tax and capital gains tax reliefs to investors. Unlike other venture capital schemes SITR can apply to loans as well as equity funding, making this accessible to charities.