CTG Newsletter – 25 November 2016
Survey to assess the cost of the Insurance Premium Tax increase
One of the headline announcements in the Autumn Statement was that the standard rate of Insurance Premium Tax (IPT) will rise to 12% from 1 June 2017 (it is currently 10%). IPT is a tax on insurers and so any impact on premiums depends on insurers’ commercial decisions, although providers usually pass on these costs. Charities do not benefit from an exemption so will be impacted.
A sample of 30 charities in 2010/11 for the Charity Tax Map project found the total cost of IPT (then at a rate of 5%) was £591,000. CTG is working to collect updated information on the expected cost of Insurance Premium Tax to charity members, following the most recent increase.
We encourage all members affected by this increase to complete this short survey.
Members are reminded that a full summary of the Autumn Statement announcements can be found here. Further information on IPT can be found here.
Durham Cathedral VAT case and Sveda – implications for charities
CTG Technical Adviser Graham Elliott comments on the First Tier Tribunal’s decision in the case of Durham Cathedral (TC05477), which CTG thinks is a welcome decision that has wider application to charities (and to others). The claim arose following the Court of Justice (‘CJEU’) decision in the case of Sveda(C-126/14). HMRC had originally directed that expenditure maintaining a bridge that provided an access path to the Cathedral had no ‘direct and immediate link’ with the Cathedral’s taxable supplies, and thus no VAT recovery was permitted. They continued to reject the Cathedral’s claim following the Sveda decision, apparently on the basis that the bridge was too far away from the Cathedral. The tribunal held that the principles in Sveda should be applied to this case and that VAT recovery was permitted.
Off-payroll working: Major changes from April 2017
Susan Ball, Partner at Crowe Clark Whitehill, has updated her commentary piece on off-payroll working following announcements in the Autumn Statement. Following consultation, the Government will reform the off-payroll working rules in the public sector (which can include certain charities) from April 2017 by moving responsibility for operating them, and paying the correct tax, to the body paying the worker’s company. In response to feedback during the consultation, the 5% tax-free allowance will be removed for those working in the public sector, reflecting the fact that workers no longer bear the administrative burden of deciding whether the rules apply.
Value of charity business rates relief in England increases
DCLG has published statistics on national non-domestic rates collected by local authorities in England 2015-16. Total relief provided to charitable occupations (that is both mandatory and discretionary relief) amounted to £1.6 billion in respect of 2015-16, an increase of £82 million or 5.4% on 2014-15.
Review of business rates relief for Northern Irish charity shops
Northern Ireland Finance Minister Máirtín Ó Muilleoir has made a ministerial statement, setting out a package of measures aimed at modernising the domestic and commercial elements of the rating system in Northern Ireland. These will be subject to continued consultation with the Finance Committee and external stakeholders. The package includes proposals for the reduction of business rates relief for charity shops from 100% to at least 90% (though no further than the 80% mandatory relief given in the rest of the UK). The Minister has estimated that if charity shops were required to pay 10% of their ratings bill, this would translate to approximately £15/week. He hoped that this would serve to redress the balance on high streets of charity retail to standard business, and that while he was in favour of continuing to single out charity shops on the high street for favourable treatment, there was a case for limiting their growth. Further information is available here.
Apprenticeship Levy – expiry of digital account funds
Lord Nash, Parliamentary Under Secretary of State at the Department for Education, has responded to a written question on an estimation of the funds that employers are likely to lose as a result of funds in their digital accounts expiring. No estimate is given on the cost of the Levy to the charity sector, but there was reconfirmation that the period employers will have to spend their digital funds, has been extended from 18 to 24 months and that employers will be able to transfer up to 10% of they levy fund to another digital account. Further information is available here.
Consultations tracker
CTG will be considering responding to a number of important consultations over the next few months. Our consultation responses rely on input from members and we would encourage you to send us your thoughts, and where relevant submit your own consultation response. The deadlines for forthcoming consultations are outlined below. Please send your feedback via the relevant consultation page on the CTG website or to info@charitytaxgroup.org.uk.
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