Charities could thrive with a ‘clean Brexit’ says major report

28th July 2017

  • Leaving EU could ‘unlock financial resources and cut red tape’
  • ‘Clean Brexit’ poses ‘less risk’ to voluntary sector than remaining in the Single Market and customs union
  • Reducing tax burden on charities could create 50,000 more jobs

A ‘clean Brexit’ could boost Britain’s charities by unlocking financial resources and cutting red tape which holds the sector back from doing more for good causes and delivering public benefit, according to a major report launched today.

‘A Brexit that works for everyone’ by Charity Finance Group (CFG) – a charity that champions best practice in finance management in the voluntary sector – warns that there are significant risks associated with options other than a clean break with the EU that could undermine the operations of the charitable sector. These risks can only be avoided if the government specifically secures these opportunities as part of a negotiated deal with the EU.

The report says that harmonising tax policy, state aid and procurement policy with the EU “creates the risk that the UK charity sector could be left in the worst of both worlds” and one that the Government “should avoid”.

CFG did not campaign on either side of the Brexit referendum and has no position on whether Brexit is a good or a bad decision for the UK. However it has carefully analysed the opportunities and benefits various aspects of any potential Brexit deal could bring.

The report says that a ‘clean Brexit’ which would allow the Government the freedom to set tax rates could be “transformational to the UK charity sector, not only reducing the amount of time spent focused on structuring activities in such a way to avoid large VAT bills and paying for advice, but also in freeing up hundreds of millions of pounds to be spent on helping advance good causes”. CFG estimates that this could help create 50,000 extra full time jobs which would be “a significant boon to the UK economy”.

On state aid, the report concluded that leaving the EU gives the UK the opportunity to reform the rules and have the highest level of flexibility to enable them to be based on social and economic needs. It says that the positive aspects of state aid rules could be retained without the need to apply state aid indiscriminately across all areas of policy. The report warns that remaining in the Single Market and customs union would mean that there would be no flexibility in state aid rules because of concerns about unfair competition.

The report says that Brexit means Britain would be able to have much greater flexibility on public procurement which would improve commissioning practice and widen the concept to ‘value’ as well as the types of products that could be included such as goods and works. This would lead to better value for money for the UK taxpayer.

Commenting on the report, Caron Bradshaw, Chief Executive, CFG said:

“It is no secret that most charities wanted the UK to remain in the EU, but the debate has moved on and charities are beginning to think about the benefits of Brexit. If the government makes the right decisions, Brexit could provide a huge opportunity for the charitable sector to flourish. Sadly, according to our research with the public, only 2% believe that disadvantaged people and communities are a top priority in Brexit for the government.

“The voluntary sector has been hindered in the past by VAT rules and state aid and now is the chance to overcome this and change the regulatory environment in which it works.

“Charities can thrive post-Brexit but it is down to the Government working with charities to deliver this.”

View the full report here. 

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