Implications for the charity sector – Autumn Budget 2024

The waiting is over. A budget from the Government, that was headlined to be one of much needed tough choices to stabilise public finances and restore balance over the forecast period.

For those in the Charity Sector one to scrutinise the details of, as there were a number of announcements that will either directly or indirectly impact Charities, some positive and some negative.

Directly impacting Charities

The provision of additional funding for both Social Care and Homelessness should enable a greater centralised provision of these services, thereby reducing demand on Charities who have had to step in to fill the need gap that has emerged.

A consultation has been concluded with legislation to follow next year to prevent abuse of the Charity tax rules, so that no personal advantage is gained and Charities make investments wisely, without an avoidance of tax motive. This is planned to take effect from April 2026, so Charities have time to adjust to the new rules.

£2m is to be provided to ensure the preservation of the work of Holocaust related charities.

Indirectly impacting Charities

For Charities that employ staff, the announcement to increase the National Living Wage to £12.21 per hour as well as a planned Employer’s National Insurance increase to 15%, and a lower starting threshold will be partially offset with the Employment Allowance increase to £10,500 per year. Trustees of Charities should carefully review and update their reserves policies and determined level of free reserves that their Charity should maintain in light of this increased cost level.

Where Charities operate charity shops as a mechanism to increase fundraising in furtherance of their charitable objectives, the Government announced an intention to permanently lower multipliers used in the calculation of business rates for retail, hospitality and leisure properties with a rateable value of under £500,000 from April 2026-27. The Government intends to give the biggest cut to qualifying properties currently paying the small business multiplier, so those with a rateable value less than £51,000.

To target support towards smaller properties, those currently paying the standard multiplier, with a rateable value between £500,000 and £51,000 will also benefit from a permanently lower multiplier.

The smallest properties will be protected by freezing the small business multiplier in 2025-26, protecting over a million properties from inflationary bill increases.

Changes to Inheritance Tax could see changes in the number of Legacies left to Charities, either as a result of increased cash being needed to satisfy resultant estate tax liabilities or to reduce overall tax liabilities being incurred.

Overall, Charity Trustees should be mindful of the implications arising from this budget when forecasting and budgeting as a matter of good governance.

Watch our Autumn Budget 2024 question time webinar

Following the Autumn Budget 2024, our panel of experts examined the announcements made by The Chancellor, discussing what these changes mean for you. They also answered questions from our live audience. This webinar is now available to watch on demand here.

Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.