Posted: 16 / 03 / 2023

Article by: Emma Houghton, Head of Charity & Compliance
Image: Posted by: HM Treasury and The Rt Hon Jeremy Hunt MP. Photographer: Andrew Parsons, OGL 3, via Wikimedia Commons

The Budget announced yesterday has been welcomed by many charities and not-for-profits, although the implications across the sector are not wholly positive.

The Chancellor announced more than a £100m increased funding for key charitable areas, in particular organisations offering cost of living support. Organisations claiming Creative Industry Tax Reliefs are also set to benefit, including an extension of the sunset clause on Museums and Galleries relief. News of a call for evidence to support the extension of VAT relief for energy efficient buildings used for charitable purposes was also well received.

However, the implications for Charity and Community Amateur Sports Clubs (CASCs) won’t be welcomed as a change in the definition of CASCs for tax purposes means that charitable tax reliefs once extended to those located in the EU and EEA are no longer applicable.

In total the Chancellor has increased charitable funding by £100 million. Around £75m has been pledged in grants to support organisations working directly with vulnerable people, in particular those providing emergency aid to the worst affected by the cost-of-living crisis. £25m will be used to increase the energy efficiency of Voluntary, Community and Social Enterprise Organisations, facilitating financial savings and more effective service delivery. A further 10m over the next two years has also been pledged to suicide prevention organisations.

Creative Industries Tax Reliefs (CITR)

Current enhancements to CITR have been extended by two years, including a taper rate for the year to 1 April 2026. However, from 1 April 2024 the definition of qualifying expenditure for Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Exhibitions Tax Relief (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.’

Anti-abuse measures on payments between connected parties will be introduced to CITR, with draft legislation expected this summer and changes in place from January 2024. Additionally, MGETR will now expire after 31 March 2026 and no expenditure after this date will be eligible for relief.

Charities and Community Amateur Sports Clubs (CASCs)

Only charities or amateur sports clubs that fall under the Jurisdiction of the High Court in England, Wales, or Northern Ireland or the Court of Session in Scotland are now eligible for charitable tax reliefs. Yesterday’s announcement of a change in tax definition means CASCs in EU or EEA no longer qualify. The change applies to any CASC that hasn’t up till now asserted their status for charitable tax reliefs. There will be a transitional period until April 2024 for EU and EEA CASCS who have asserted their status for charitable tax reliefs before 15 March. Significantly, previously exempt income could now be taxable and carry significant financial implications for some CASCs.


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