Boost for social investment and digital giving in Budget 2013
Budget announcements on social investment tax relief and making it easier to claim Gift Aid through a range of digital giving channels, as well as the Employment Allowance, have been welcomed by sector experts and Philanthropy Impact.
The government will consult on the introduction of a new tax relief to encourage investment into social enterprises and has committed specifically to including a measure in the Finance Bill 2014.
Minister for Civil Society Nick Hurd MP said he hopes the move will be a major step forward for social investment: “We want to make it easier to invest in social ventures, whether that is buying shares in a local community shop, lending to a start-up social enterprise employing disadvantaged people, or investing alongside others in a dedicated social investment fund.”
David Hutchison, CEO of Social Finance who pioneered social impact bonds (SIBs) in the UK, said that tax breaks: “Would level the playing field to allow social enterprises to offer the same tax advantages as for profit enterprises. Enhanced access to capital will enable them to deliver impact at greater scale and play a larger part in delivering public services.”
Social Finance believes that the simplest route would be to adjust current tax advantaged schemes to allow all regulated social sector organisations (such as charities, community benefit Industrial and Provident Societies and Community Interest Companies) with a range of activities and trades to benefit.
The government will also consult on proposals to make it easier to claim Gift Aid through a wide range of digital giving channels, including options for enabling donors to complete a single Gift Aid declaration to cover all their donations through a specific channel. The Charity Tax Group (CTG) said it is hopeful that a solution will be found to future proof the Gift Aid system for charities.
The news of the Employment Allowance and the VAT registration and deregistration thresholds being increased in line with inflation are also welcome news. The Budget announced that from April 2014 every business and charity will be entitled to a £2,000 Employment Allowance towards their employer NICs bill. HMRC estimate that this will be worth £45m to 35,000 charities. The Budget also stated that from 1 April 2013 the taxable turnover threshold which determines VAT registration, will be increased from £77,000 to £79,000.