Budget 2021 “very disappointing” for charity sector, says Charity Tax Group

The Charity Tax Group (CTG) has branded the lack of sector-specific support in Budget 2021 “very disappointing”.

The report comes after the Chancellor Rishi Sunak set out the country’s path to economic recovery earlier this month.

Among these measures, the Government revealed that the Coronavirus Job Retention Scheme (CJRS) would be extended by five months until the end of September, while new Restart Grants of up to £18,000 will give retail and hospitality premises the means to restart and recover from the pandemic.

The business rates holiday has also been extended until 30 June and is to be replaced by a transition rate until 31 March 2022. Likewise, the temporary reduced rate of VAT for hospitality and leisure businesses will be extended until 30 September and is to be replaced by a transition rate of 12.5 per cent until 31 March 2022.

But the CTG have questioned whether the Budget goes far enough for charities.

Commenting on the Restart Grants scheme, the group said the initiative could be helpful providing there is confirmation that EU state aid rules no longer apply; it was revealed last week that the UK Government was wrongly applying state aid rules, meaning British organisations were missing out on thousands of pounds of essential support.

It is also “crucial” that local authorities are given “prompt guidance and support to administer these grants”, following reports that some councils were rejecting applications incorrectly.

“This is particularly important given the lack of general funding for the charity sector, despite the reliance on charitable services and the ongoing financial pressures charities face,” said Richard Bray, Acting Chair of the CTG.

“Similarly, extension of the temporary reduced VAT rate will be helpful to those charities able to benefit from it. However, following the UK’s exit from the EU, the Chancellor has missed an important opportunity to commit to a fundamental review of VAT, which is essential to tackle the structural distortions currently faced by charities resulting in over £2 billion a year in irrecoverable VAT.”

Mr Bray added: “It is important that the vital role of charities is not forgotten and proactive steps are taken to improve the fiscal environment they operate in.”

For help and advice with related matters, please get in touch with our expert charity finance team today.

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