Spring Budget 2023: How will it affect the Not-For-Profit sector?

Spring Budget 2023: How will it affect the Not-For-Profit sector?

The Spring Budget 2023 saw the Chancellor make a few welcome announcements that will benefit organisations claiming creative industries reliefs, including an extension of the sunset clause on Museums & Galleries Relief for a further two years. Less welcome, although unsurprising, is a change to the definition of Charity or Community Amateur Sports Club (‘CASC’) for tax purposes which requires them to be subject to UK jurisdiction (previously Charities located in the EU or EEA could qualify). The change in rules apply immediately, but EU or EEA organisations that were previously accepted as Charities for UK tax purposes will continue to benefit from Charitable exemptions until 31 March 2024. A call for evidence has also been released about extending the favourable VAT treatments for energy saving materials to buildings used for charitable purposes, which would be very welcome if adopted. Finally, the Government announced further funding for regeneration, cost of living support and suicide prevention, which will support many organisations working in those areas.

Creative Industry Tax Reliefs: Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief

Further assistance has been provided through the extension to the current enhanced rates of relief for Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibitions Tax Relief (MGETR) for two years, with a taper rate for the year to 1 April 2026. It should be noted though, that from 1 April 2024 the definition of qualifying expenditure for TTR, OTR and MGETR will be changed from ‘expenditure that is incurred on goods and services provided from within the UK or EEA’, to ‘expenditure on goods and services that are used or consumed in the UK.’

Administrative changes are coming to Creative Industry Tax Reliefs, including an anti-abuse measure on payments between connected parties. Draft legislation will be published this summer and changes will take effect from January 2024. Museums and galleries with an eye on the future should also be aware that the MGETR is now due to expire after 31 March 2026, and no expenditure after this date will be eligible for relief.

Charities and Community Amateur Sports Clubs (CASC)

The tax definition of a charity or CASC has changed. Prior to 15 March 2023, charities or CASCs located in the UK, EU or the EEA could qualify for charitable tax reliefs in the UK. Now, only charities that come within the jurisdiction of the High Court in England, Wales or Northern Ireland, or the Court of Session in Scotland will qualify for UK charitable tax reliefs. For CASCs, it changes the location condition so that they must be based in, and provide facilities for, sports in the UK.

This measure takes effect now for any charity or CASC that has not asserted their status for charitable tax reliefs to date. For non-UK charities and CASCs that have asserted their status for charitable tax reliefs on 15 March 2023, there will be a transitional period until April 2024. Every charity and CASC should consider the impact of this on their ability to claim tax reliefs now, as of 15 March 2023 and the position for 1 April 2024. It may mean that previously exempt income (or expected to be exempt income) is now taxable and could prove costly from a tax perspective.

VAT: relief for energy saving materials – improving energy efficiency and reducing carbon emissions

The government is publishing a call for evidence on options to reform the VAT relief for the installation of energy saving materials, including a possible extension of the relief to include buildings used for a relevant charitable purpose. This is an area which has been highlighted by charities and would be a welcome extension of the relief.

Charity support for cost of living and suicide prevention

Local charities and community organisations providing cost of living assistance can benefit from additional Government funding. Similarly, charities that provide suicide prevention activities within the voluntary sector should consider how to benefit from increased funding.

Housing Associations

NFP organisations have an opportunity to be involved in initiatives and potentially benefit from some additional funding for Levelling Up activities. Over £400 million investment was announced to provide bespoke place-based regeneration in twenty of England’s areas most in need of levelling up.

Involvement and funding in nutrient neutrality credit schemes should be considered where social housing is being developed. The government will provide funding to support clearer routes for housing developers to deliver ‘nutrient neutral’ sites, in line with their environmental obligations.

Local leaders will now be able to set the strategic direction over the Affordable Housing Programme in their areas, although no detailed explanation of how this will work is available to date.

Public Swimming Pools

Organisations should consider their eligibility for claiming support if they are running a pool not-for-profit, as £60 million Government funding has been allocated to support these.

If you want to speak to one of our Not-For-Profit industry experts to discuss in more detail how the announcements in the budget could affect your organisation, please get in touch and we will be happy to help.