*The majority of the tax cuts announced in the Growth Plan were reversed on 17 October, following adverse market reaction to the announcements and associated political pressure – read more here*

The Chancellor has published a Mini-Budget, titled as a “Growth Plan“. The key measures for charities are outlined below and are also summarised in this Treasury press release.

Charity Tax Group (CTG), Chair, Richard Bray commented:

“It is good news that the Government recognises the importance of Gift Aid to charities by maintaining it at the current level until April 2027.  Extending transitional relief for a further year gives charities time to prepare for the ultimate fall in Gift Aid income. At the same time, it will be important that work is done to modernise and digitise the Gift Aid system to make it fit for the future.

“The reversal of the the Health & Social Care Levy will save larger charities money and the off-payroll working rules will save charities time and administration.

“The tax system is complex for charities and we hope that the work of the Office of Tax Simplification (OTS) is continued under the direct control of HMRC and HM Treasury.”

“CTG calls on the Government to continue to engage with the sector as future tax reforms are developed.”

INCOME TAX AND GIFT AID

The Government will bring forward the 1 percentage point cut to the basic rate of income tax to April 2023, 12 months earlier than planned. This will apply to the basic rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland; the savings basic rate which applies to savings income for taxpayers across the UK; and the default basic rate which applies to non-savings and non-dividend income of any taxpayer that is not subject to either the main rates or the Scottish rates of income tax.

A four-year transition period for Gift Aid relief will apply, to maintain the income tax basic rate relief at 20% until April 2027. This means in practice that charities and CASCs will continue to claim Gift Aid and GASDS at 25p for every £1 of eligible donation made between 6^th April 2023 and 5^th April 2027.   An HMRC Factsheet can be read here.

There will also be one-year transitional period for Relief at Source (RAS) pension schemes to permit them to continue to claim tax relief at 20%.

The additional rate of income tax will also be removed from April 2023. This will apply to the additional rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland. The additional rate for savings, dividends and the default rates will also be removed from April 2023, and this change will apply UK-wide. As the additional rate of income tax will be removed current additional rate taxpayers will also benefit from the Personal Savings Allowance of £500 for higher rate taxpayers. Charities will need to assess the implications of this announcement on the tax-effective giving plans of their higher-earning donors.

Where rates are devolved in Scotland the Scottish Government will receive funding through the agreed fiscal framework to allocate as they see fit.

NATIONAL INSURANCE INCREASES REVERSED

• The 1.25% National Insurance increase introduced in April 2022 to be reversed from 6 November 2022
• The Health and Social Care Levy due to be introduced in April 2023 will be cancelled through new legislation

Read a full summary here. This announcement was made in advance of the mini-Budget by the Government on 22 September. An HMRC update, including details on the information to include on payslips can be read here. A separate fact sheet can be read here.

ENERGY BILLS SUPPORT

Through a new government Energy Bill Relief Scheme, the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices. This support will be equivalent to the Energy Price Guarantee put in place for households.

It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial 6 month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.

The Government also announced today further details on the separate Energy Bills Support Scheme (EBSS) to ensure that the £400 discount to households starting from October will also be available to the 1% of households who would not otherwise have received this support. Additional funding will be made available so that payments will be extended to include people such as park home residents and those tenants whose landlords pay for their energy via a commercial contract. The Government has said that it is committed to ensuring such households receive the same support for their energy bills. CTG has been working with housing associations, churches and universities to ensure that charity tenants and beneficiaries did not miss out on this relief. Further detail is required but this is a positive step.

The full BEIS press release can be read here.

ABOLISHING THE OFFICE OF TAX SIMPLIFICATION

The Government has announced that instead of having a separate arms-length body oversee simplification, it will embed tax simplification into the institutions of government. It will therefore abolish the Office of Tax Simplification and set a mandate to the Treasury and HMRC to focus on simplifying the tax code.

CANCELLING THE CORPORATION TAX RISE

The previously announced planned increase in the UK Corporation Tax rate from 19% to 25% that was due to take effect in April 2023 will not go ahead. Companies will continue to pay 19% on their taxable profits.

REPEALING OFF-PAYROLL WORKING RULES

The 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) will be repealed from 6 April 2023. From this date, workers across the UK providing their services via an intermediary, such as a personal service company, will once again be responsible for determining their employment status and paying the appropriate amount of tax and NICs.

VAT FREE SHOPPING

The Government will introduce a modern, digital, VAT-free shopping scheme for non-UK visitors to Great Britain, with the aim of providing a boost to the high street and creating jobs in the retail and tourism sectors.

STAMP DUTY LAND TAX

From 23 September 2022, the government will increase the threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential properties in England and Northern Ireland from £125,000 to £250,000. The government will also increase the relief that first-time buyers can receive. From 23 September 2022, the threshold at which first-time buyers begin to pay residential SDLT will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyers relief can be claimed will also increase, from £500,000 to £625,000.

INCREASE TO ADMINISTRATION EARNINGS THRESHOLD (AET)

The Government is increasing support and incentives for those on Universal Credit (UC) across Great Britain by increasing the Administrative Earnings Threshold to 15 hours a week at National Living Wage for an individual claimant (and 24 hours a week for couples) from January 2023. This builds on the increase due to come into effect from 26 September 2022 which will raise the threshold from 9 hours a week to 12 hours a week for an individual (and 19 hours a week for couples).

INVESTMENT ZONES

The Government will work with the devolved administrations and local partners to introduce Investment Zones across the UK. Investment Zones aim to drive growth and unlock housing. Areas with Investment Zones will benefit from tax incentives (including certain business rates reliefs), planning liberalisation, and wider support for the local economy. An HMRC factsheet can be read here.