How Does the Budget Impact on the Voluntary sector?

How Does the Budget Impact on the Voluntary sector?

So, what was in the Autumn budget for the voluntary and community sector (VCS)? Beforehand there was much speculation about increased spending on housing, health and social care, education and public sector wages. But in reality it was widely acknowledged that with the downgraded growth figures and high level of domestic debt there was little room for manoeuvre. What does it look like in the cold light of morning? Here are some of the more newsworthy announcements.

Gift Aid

Of most note for the VCS is the change to Gift Aid donor benefit rules. Papers issued by the Treasury after the Chancellor's Budget speech indicate the government will reduce from three to two the monetary thresholds setting out how much the value of benefits that charities can give a supporter as a result of a donation and still claim Gift Aid on that gift. The change will mean that from April 2019, benefits can be worth up to 25 per cent of the value of donations of up to £100 and worth up to 5 per cent on donations of more than £100.

Universal Credit

There has also been some movement on Universal Credit. £1.5bn has been put aside to remove seven-day waiting period; new claimants in receipt of housing benefit will get it for two weeks. This is a partial victory for those campaigning against the injustices of the universal credit system leaving many in hardship. Reducing the waiting time of claimants by one week, make advances quicker and give people housing benefit for longer to avoid the threat of evictions while they wait for universal credit.

Business rates

The changes to business rates have been controversial and impact on many of the small community business and charities that operate locally. The proposed steep rises have been reduced.

A decision was announced to base the annual increases to business rates on the consumer price index (CPI), rather than the higher retail price index (RPI), which comes after a fierce lobbying campaign. The change was planned for 2020 but will be brought forward to 2018.
The chancellor also told the House that rateable values would be recalculated every three years instead of every five. That should prevent the steep increases experienced in 2017, when the first revaluation in seven years took effect. Some London businesses faced increases of more than 100 per cent, but rises are now being phased in over several years.

In addition, the law impacting businesses in offices linked by a communal lift, corridors or stairs who are treated as occupying more than one property (“staircase tax”) and therefore liable to larger bills is to be changed and extra money paid by businesses since the ruling will be refunded.

The Chancellor has told parliament that local authorities in London would be able to retain 100 per cent of business rates collected as part of a pilot scheme next year. This might mean councils in the capital are less likely to give a voluntary exemption to charities on the 20 per cent of business rates they are required to pay. Watch this space.

Health and Social Care

An additional commitment of resource funding of £2.8billion to the NHS in England - £350million immediately to allow trusts to plan for this winter, £1.6billion in 2018/19 with the balance in 19/20, taking the extra resource into the NHS next year to £3.75billion in total. However, this falls short of the funding. NHS chiefs say that this is about half the amount necessary to plug the funding gap.


Housing is in short supply especially affordable housing in London.  An additional £44bn of capital funding has been pledged to help build 300,000 homes annually by mid-2020s. There will be a review to look at ways to speed up planning permission.

What didn’t happen?

Insurance Premiums

Fears that charities would be affected by further increases in the rate of insurance premium tax were unfounded and the rate appears have been frozen until at least 2022/23. Lobbying by charities to exempt the sector from IPT were unsuccessful.


VAT registration thresholds will not be changed for at least the next two years, the Chancellor announced. There had been speculation that this threshold was to be reduced from £85,000 to £20,000 in order to bring it in line with the rest of Europe, which would have affected some smaller charities.