How will the Autumn Budget 2021 affect charities?

Charities are keenly aware of increased demand for their services, and fully expect this to continue as the cost of living rises further. Charities will be balancing the impact of some helpful measures announced in the Autumn Budget 2021, particularly for the arts and culture, against increasing demand for services and inflation in costs such as fuel and staffing.

Business rates reliefs

Following a review of the business rates system, the Government has confirmed that at this time, it won’t change any existing business rates reliefs, including the mandatory and discretionary charity reliefs. These are worth over £2 billion a year to charities and are very important to the sector.

A new temporary business rates relief for eligible retail, hospitality and leisure properties for 2022/23 is being introduced. Eligible properties will receive 50% relief, up to a £110,000 per business cap. This will help some charities with eligible properties (including charity shops). Shops held in a charity already receive 80% mandatory relief, but those in subsidiary companies don’t have the mandatory relief (and may not have discretionary relief) so this will benefit them.

Staff costs from April 2022

Budgets for staff costs should provide for the new Health and Social Care Levy from April 2022, when National Insurance Contributions (NICs) for working age employees, self-employed people and employers will increase by 1.25%.

From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to the earnings of individuals working above State Pension age, and NICs rates will return to their 2021/22 levels.

In April 2022, the National Living Wage (NMW) rises from £8.91 to £9.50. NMW for younger workers rises as follows:

• Aged 21 to 22 £8.36 to £9.18

• Aged 18 to 20 £6.56 to £6.83

• Aged under 18 £4.62 to £4.81

• Apprentice rate £4.30 to £4.81

The NMW increases will benefit over two million lower-paid workers.

Temporary extensions to cultural tax reliefs

For companies investing in creating new theatrical productions, the Theatre Tax Relief (TTR) subsidy became significantly more valuable from 27 October 2021. There are also increases for Orchestra Tax Relief (OTR) and Museums and Galleries Exhibition Tax Relief (MGETR).

MGETR, which supports charitable companies to put on high-quality museum and gallery exhibitions, will be extended for a further two years until 31 March 2024.

The rates increase and then decline as follows:

A further announcement states: “From 1 April 2022, changes will be made to better target MGETR, TTR and OTR and make sure that they continue to be safeguarded from abuse.” However, no further detail is given.

For further information please contact your usual Larking Gowen contact. You can find contact details on the Our People section of the Larking Gowen website. Alternatively, call 0330 024 0888 or email enquiry@larking-gowen.co.uk.

Giles Kerkham