The annual ritual of crowding around the office TV, listening to the Chancellor’s Budget announcement to see if there are any mentions of charities is now over for another year. And the snap judgement on this year’s Budget is… pretty good, to be honest.
Charities weren’t front and centre like they were in 2011, but then neither were they presented with a nasty surprise as they were with 2012’s charity tax debacle. This year, there were a few announcements on charities and social investment and they all seemed pretty positive.
I want to focus on two announcements: on digital Gift Aid and on a new tax incentive for social investment (not because the fact that charities will be eligible for a new £2,000 employer allowance against National Insurance Contributions is not important, but merely because I don’t have anything much to say except “er, that sounds good?”).
Digital Gift Aid
At CAF, we have been banging on for years about the need to reform the Gift Aid system to make it fit for the 21st century and ensure that it works with new forms of technology-enabled donations. So it was great to see that not only have the Government committed to a full consultation on changes to Gift Aid by Summer 2013, but that they specifically mentioned the idea of “enabling donors to complete a single Gift Aid declaration to cover all their donations through a specific channel”. Further clarification from HMRC makes it clear that the prospect of a “universal Gift Aid declaration” linked to a donor database is also still on the table.
We have long argued that the ambition for Gift Aid should be to combine a one-off universal declaration with a simple form of unique identifier and a database of donors who had signed up for the system. This would enable charities to cross-reference donations against the central database to see who was signed up for Gift Aid. If the identifier was something that could be linked automatically to donations made through certain channels (which would certainly be possible for mobile and online giving), the whole process could happen in way that meant the donor experience was almost frictionless.
Obviously this vision is still a long way off, and one swallow doth not a summer consultation make, but this is a promising first step on the road to getting Gift Aid fit for the 21st century.
Social Investment tax relief
The other big news that caught my eye was the announcement that “the Government will introduce a new tax relief to encourage private investment in social enterprise”. This is another thing that CAF has been calling for for some time, and I have been involved in various working groups and reviews on the issue for a couple of years. I have to say that I was quite pessimistic about there being any positive news in this year’s Budget, so I am happy to be proved wrong!
There is no suggestion at this point of what form this relief might take- will it be a truly new tax incentive solely targeted at social investment, or an extension of an existing relief (such as the Enterprise Investment Scheme or Venture Capital Trust) to cover social as well as commercial investment? However, a commitment to introducing a new relief of this kind (whatever form it takes) is definitely positive news. CAF will be working with the Treasury and with others in the social investment sector to help shape the new incentive over the coming months.