Chancellor announces promising budget for charities

24th November 2008

Chancellor announces promising budget for charities

The Charity Finance Directors' Group (CFDG) has welcomed the Chancellor's pre-budget report, which is set to aid charities to the tune of around £70m thanks to the temporary 2.5% decrease in the standard rate of VAT, starting on 1st December this year.

CFDG also welcomes the extension of the VAT cash accounting scheme which will provide much needed flexibility for charities at this difficult time. In addition, the Government has also committed to amending the sectoral rates of the VAT Flat Rate Scheme in line with the standard rate reduction. This measure should simplify VAT accounting for charities in line with the aims of the recent consultation on Partial Exemption and the Capital Goods Scheme.

CFDG are, however, disappointed to see the proposed increase in employers and employees rates of National Insurance Contributions by 0.5%, from April 2011. This would be an additional burden on the sector and its employees at a time charities will still be feeling the effects of the recession, and there will be increased numbers of beneficiaries needing charities' help.

There are various pieces of anti-avoidance legislation contained within the budget, which CFDG will be considering carefully over the coming days to assess their implications for charities. Initially though CFDG is concerned that the Government is continuing to take such a long time to reform the anti-avoidance rules around substantial donors to charity. The pre-budget report notes that the Government will not now release their response to the substantial donors consultation until next year.

Finally, however, CFDG is pleased to note that the Government is continuing to explore alternatives to the current Gift Aid system, which is of such value to charities. CFDG was part of a coalition of sector bodies that recommended an accounts-based scheme for Gift Aid, and we believe this system would greatly increase charities ability to benefit from Gift Aid.

- Ends -

Notes to Editor:

1. The Charity Finance Directors' Group was set up in 1987 and is an umbrella group that specialises in helping charities to manage their finance-related functions.

2. CFDG's 1,530 plus members are responsible for the finances of charities with a wide variety of income levels. Between them our members manage some £14.7 billion in charity income per year.

3. For further information please contact our Policy Team.

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