Unusually, this year’s Budget does have some announcements for charities.
Price Bailey are delighted that we were involved in bringing to the attention of Mr Robert Jenrick MP, Exchequer Secretary to the Treasury in May 2018 that the charities’ small trading exemption had not changed for a very long time. Partner and Charity Specialist Helena Wilkinson met with the Treasury in the summer to explain the risks but more importantly the reduction in the tax burden for the charity sector if the limit could be increased. So we are delighted that the budget announcement today has indeed increased the limits. We are really pleased that Price Bailey was able to influence this change for the sector which will allow many smaller charities not to require having a trading subsidiary and simplify their structures, governance and audit costs in the future.
The increased limits will apply from April 2019 – 1 April for incorporated charities and 6 April for unincorporated entities. The Finance Bill 2018-19 will include the legislative provisions to increase the charities’ small trading exemption limits. The charities’ small trading limit relates to trading undertaken by a charity that is not in relation to its primary purpose (i.e. relates purely to raising funds for the charity to use with common examples being the selling of merchandise, sponsorship and Christmas card sales). In practice, most charities will undertake such non-primary purpose trade and with the current limit in the charity being so low, many small charities have to create trading subsidiaries to undertake these activities. This exemption is a step in the right direction to allow many more charities the freedom to undertake these activities within their charity structure.
The limits will increase from the current level of £5,000 to £8,000 being the allowable ‘trade’ for charities whose turnover (or income of the charity) in total under £20,000. The upper limit, which is set at £50,000 where the charity’s turnover (or total income) exceeds £200,000, will increase to £80,000 for income over £320,000.
There are some changes to the operation of gift aid which are also about simplification and reducing the administration burden on charities (as well as saving them money). The changes apply to gifts made on or after 6 April 2019.
Retail Gift aid
The Retail Gift Aid Scheme will be updated to allow charity shops that use the scheme to only have to send letters to donors every three years when their goods raise less than £20 a year, rather than every tax year as currently required. This will save on a lot of postage for smaller donors.
Gift Aid Small Donations Scheme
The Gift Aid Small Donations Scheme (GASDS) applies to donations of £20 or less made by individuals in cash or by contactless payment, and allows for gift aid to be claimed on these donations subjects to overall claim limits. Currently only a donation of £20 or less can be included and this measure will increase the limit to £30.
The VAT registration limit is set at £85,000 (persons making taxable supplies are required to register and account for VAT when this level is exceeded). The deregistration threshold for taxable supplies is £83,000. In the 2017 Autumn Budget, these limits were maintained until March 2020. The Budget 2018 has now confirmed that these thresholds will remain for a further 2 years until 31 March 2022.
Blood Bikes will gain exemption form Vehicle Excise Duty (VED) from April 2020 for purpose-built vehicles operated by Blood Bikes.
This post was produced by Helena Wilkinson, Charity Partner at Price Bailey. To contact Helena about any of the points raised in the article above, feel free to get in touch using the form further below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.