CTG Newsletter – 6 December 2016
Draft Finance Bill 2017 published
The Government has published an overview of legislative changes to tax law which the government plans to introduce in Finance Bill 2017, in secondary legislation, and (in some cases) in future Finance Bills. It includes changes arising from announcements on 23 November at Autumn Statement 2016, and Budget 2016, where not already enacted. The closing date for comments is 1 February 2017. Links to specific documents and summaries can be found below
CTG is reviewing in detail all the other clauses which may impact charities and their trading subsidiaries (including the substantial shareholding exemption, carried forward losses rules and corporation tax deduction for contributions to grassroots sports) and will provide further analysis in due course.
Insurance Premium Tax survey
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%). Charities do not benefit from an exemption so will be impacted. We encourage all members affected by this increase to complete this short survey. 63 charities have already responded providing vital information on the scale of the impact on charities.
Following the collection of this data, CTG will be considering further representation to Government and the insurance sector about ways to mitigate the adverse impact of these recent changes. We met with representative of the Association for British Insurers (ABI) earlier this week and other meetings with affected stakeholders are planned.
HMRC has published a policy paper confirming the increase to 12%. The Government estimates that the increase will be worth £855m each year by 2021-22. Its policy objective is simply that it is a revenue raiser for the Exchequer.
Chancellor waives VAT on Christmas charity single
The Chancellor has announced that VAT on sales of the X Factor winner’s charity single will be donated to children’s charities, Together for Short Lives and Shooting Star Chase. Further information can be found here.
Parliamentary questions on GASDS
In response to a series of written questions by Liberal Democrat peer Baroness Barker on the Gift Aid Small Donations Scheme, Lord Young of Cookham, responded on behalf of the Government highlighting the strong and constructive links with the sector, support for smaller charities and information on take-up. He was unable to provide details about the cost of administering GASDS and instances of malpractice as they are included in the figures for the wider Gift Aid scheme, and cannot be separately extracted. The full response can be read here.
Parliamentary question on SITR
The Financial Secretary to the Treasury, Jane Ellison MP, has responded to a question by Kirsty Blackman MP (SNP) on the Social Investment Tax Relief (SITR). The Minister confirmed that the Government had announced the enlargement of SITR at Autumn Statement 2016 and that by 2021-22, SITR is forecast to cost £65m per year. She also confirmed that the Government will review the design and operation of SITR within two years of its enlargement to ensure that it is being used as intended, that it supports social enterprises which would otherwise struggle to access finance, and that it delivers value for money. The full response can be read here.
VAT and temporary workers case
The Upper Tribunal is this week hearing the Adecco case on the VAT treatment of temporary workers. The First Tier Tribunal found in favour of HMRC although the Tribunal Chairman recognised that this decision was at odds with the finding in Reed and anticipated an appeal to a higher court.
This remains a significant issue for the sector and CTG has worked with charities and advisers to support the case, with the current cost to the sector estimated to be more than £20m a year. Further background on the case and the decision in the First Tier Tribunal can be found 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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