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Have you seen the recent Autumn statement, announced by the Chancellor? You may be wondering how this impacts your church. In this article, we break down some of the changes that you may be interested in.
With the government setting it’s priorities as “stability, growth and public services” the Chancellor has unveiled his Autumn Statement. It includes a variety of changes to taxes, pensions, benefits and the governments’ energy support package as well as much more. Overall, the chancellor has elected for a combination of tax raises and cuts to public spending to carve the government’s path forward.
Two of the largest factors that will affect individuals, businesses and charities are the combination of lowering the maximum tax rate threshold from £150,000 to £125,400 as well as raising the living wage (also known as the minimum wage) by 9.7% to £10.42 which equates to a £1600 a year rise for full-time workers.
The living wage increase is not restricted to those over the age of 23 however, it is a general increase for all living wage recipients as follows:
The lowering of the maximum tax rate threshold from £150,000 to £125,400 means that more taxpayers will become eligible for the higher rate of Gift Aid. Whilst it is only a minor change to the charity sector as a whole, it may in fact aid in encouraging newer higher income earners to make Gift Aid donations.
When it comes to National Insurance contributions, the “government will fix the level at which employers start to pay Class 1 Secondary NICs for their employees (the Secondary Threshold) at £9,100 from April 2023 until April 2028.” Meaning that employment costs for larger employers, including charities, will go up. Additionally, the VAT registration and deregistration thresholds will be maintained for an additional 2 years, which will likely mean that a larger number of charities will have to register for VAT.
In line with the OECD inspired reforms “Corporation Tax will increase to 25% from April 2023.” Additionally, the annual Capital Gains tax allowance will be cut by over 50% from its current level of £12,300 to £6,000 from April 2023 and further cut to £3000 from April 2024.
As for benefits, the benefits cap is being raised in line with inflation by 10.1% “from £20,000 to £22,020 for families nationally and from £23,000 to £25,323 in Greater London”. Alongside this, to help mitigate some of the worst cost of living effects, some households on means-tested benefits “will receive a cost-of-living payment of £900 in instalments”. Furthermore, social housing rent increases are now capped at 7% where it was previously capped at 11%. So there will still be an increase in social housing rent, but it will not be as high as previously expected.
Lastly, the government has backtracked on the idea of introducing an Online Sales Tax (OST) for the time being due to concerns of “complexity and the risk of creating unintended distortion or unfair outcomes between different business models”. However, this will be reviewed further down the line.
There are several changes to the business rates which may be of interest to anyone in the charity sector. Namely, Business Rates multipliers will be frozen in 2023-24 at 49.9p and 51.2p, meaning that “mean bills are 6% lower than without the freeze, before any reliefs are applied.”
Additionally, in an effort to help businesses, a Transitional Relief scheme has been announced which will limit “bill increases for the smallest properties to 5%”. Additionally, any small businesses that lose their eligibility for the Small Business or Rural Rate Relief will have their “bill increases capped at £50 a month”.
Lastly, the chancellor announced that “support for eligible retail, hospitality, and leisure businesses is being extended and increased from 50% to 75% business rates relief up to £110,000 per business in 2023-24. Around 230,000 RHL properties will be eligible to receive this increased support worth £2.1 billion.”
The government announced the creation of the Energy Efficiency Taskforce (EETF) which is committed to “drive improvements in energy efficiency to bring down bills for households, businesses and the public sector”, with new government funding worth £6 billion being made available from 2025 to 2028.
With the Alternative Fuels Payment (AFP), the government is doubling its support of homes that use alternative fuels to £200 as well as providing “a fixed payment of £150 to all UK non-domestic consumers who are off the gas grid and use alternative fuels”.
The Energy Bill Relief Scheme (EBRS) will publish it’s findings by 31 December 2022. The government has already stated that “the overall scale of support the government is set to offer will be significantly lower”. The updated terms of reference for the review can be found here.
With regards to local government, it was announced that Central government is giving local authorities greater flexibility over their finances by allowing them to increase their council tax by 3% without a referendum. They will also be able to increase the adult social care precept by 2% per year.
As for the governmental departments, certain departments will receive budget increases, namely: healthcare, schools, social care and defence, with cuts to come to other departments from 2024. The fund for the NHS and social care is being increased “by up to £8 billion in 2024-25”. The government will provide an additional £3.3 billion each year for the next 2 years to help support the NHS in England. An additional £1 billion will be invested in 2023-24 to “get people out of hospital on time and into social care.” The other government departments will have their Spending Review settlements until 2025 honoured with a slowdown in spending increases from 2025 onwards.
