Are charities set to see another spike in demand following the Spring Budget?

Digital Markets, Competition and Consumers Bill

There were concerns that the Digital Markets, Competition and Consumers Bill – currently with the House of Lords to debate – would affect charities’ ability to claim gift aid. Jeremy Hunt confirmed today that the government will amend gift aid legislation to ensure charities can continue to claim when, as expected, the bill is passed in the House of Lords.

Public spending

There was a keen eye on public services’ spending following the very public challenges being faced by local authorities, including in Birmingham and Nottingham. The Chancellor committed to a keeping a 1% increase in public spending above inflation. Some have questioned whether this is sufficient when taking into account population growth and the fact that certain sectors have protected budgets (e.g. health and schools) likely resulting in cuts to others (e.g. the judiciary and prisons) to balance the books.

Supporting people and communities

In September 2021 the government established a £500m Household Support Fund which allows local authorities to help families via food banks, warm spaces and food vouchers. This was due to end on 31 March 2023 but has been extended by six months.

Those in significant financial distress can apply for a debt relief order, yet up until now there was an application fee of £90. Citizens Advice lobbied the government to abandon the application charge. The Chancellor said he had listened, and today announced the abolition of the fee.  He also extended the term over which new loans can be repaid from 12 months to 24 months.

The Chancellor raised the threshold at which child benefit stops and moved the earnings threshold from individual to household from April 2026. The benefit will be withdrawn when an individual in the household reaches £80,000 (raised from £60,000). To appease voters today, he raised the threshold on the benefit from £50,000 to £60,000.

Tax implications for charities

The Chancellor also announced the threshold at which VAT registration is applicable would increase from £85,000 to £90,000. This should result in smaller organisations and charities paying less tax without the costly obligation of VAT registration.

Whether today’s budget announcement will address the concerns expressed in the charity sector is up for debate.  There was no fiscal rabbit out of the hat moment, with prudence taking precedent. The door is open to one last hurrah via a final fiscal statement before the next election but one way or another, the Conservative party must call an election by January 2025.