The Chancellor has presented his 2021 Budget in conjunction with the 2021 Spending Review.
There is no doubt that this has been a difficult balancing act, with public finances being stretched as a result of the pandemic, but many areas of national life feeling under resourced after a lengthy period of restricted expenditure, or impacted severely by COVID. The Chancellor has however found himself in a slightly better position than originally anticipated and as a result has felt able to relax the purse strings slightly. However, among the talk of “levelling up” and “building back better” but amid the slogans what is the reality for the NFP sector?
First of all there are some very useful changes for the NFP sector:
- The Theatre and Orchestra Tax Reliefs will be substantially increased in value for the next two years before returning to current levels from 2024.
- The Museums and Galleries Tax Relief which was to be withdrawn in 2022 will also be increased in value and extended until March 2024.
- For those organisations which have business rates bills there will be 50% discounts on business rates for most retail, hospitality and leisure businesses for 2022-2023, as well as a number of other relaxations to the business rates structure. Charity Business Rates reliefs are preserved.
These are welcome changes for organisations which have been punished heavily by the pandemic. The changes are however only temporary and particularly for business rates we wonder whether this will “fix” this particular problem.
The scope of R&D tax credits have been increased but charities are still precluded from benefitting from this relief.
In terms of expenditure, there is an additional funding for DCMS specifically to support museums and cultural and sporting bodies.
Many will be pleased to see that the Overseas Aid budget will return to pre-pandemic levels as a proportion of income.
In terms of changes not specific to NFP there are further steps towards rolling out MTD across the whole tax sector, and investment in tax administration and further legislation combatting tax avoidance.
Importantly for all employers (including those in the NFP sector) there will be an additional 1.25% of salaries to pay from April 2022 on the “Health and Social Care Levy” which for next tax year will be an addition to NICs, before being formally split out from April 2023.
The full detailed Menzies response to the Budget can be found here: