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2018 Budget update: business rates relief and gift aid scheme rules

Several budget measures could benefit charities.

Date published

The government has announced a number of tax changes in the 2018 budget which may benefit charities.

Charities with shops could benefit from the new a business rates Retail Discount scheme. The scheme applies to occupied retail properties with a rateable value of less than £51,000. It applies for the next two years - 2019-20 and 2020-21. 

This includes charity shops - but the premises must be wholly or mainly used for retail purposes.

The value of discount will be one third of the bill, and must be applied after mandatory reliefs and other discretionary reliefs funded by section 31 grants have been applied.  

The Government has published guidance to authorities about the operation and delivery of the policy.

Retail gift aid scheme rules relaxed

The government also announced that it would relax the rules on the retail gift aid scheme from April 2019. Charities operating the retail gift aid scheme are currently required to issue letters to donors each year. This requirement will be relaxed to every three years where the total donations in a tax year are less than £20. 

Charity trading limits raised

At present, a charity does not pay tax on profits that it makes from charitable trading when such trading is part of its primary purpose. If the trading does not relate to its primary purpose, the profits are also exempt from tax 'if its turnover is below the small trading tax exemption limits'.

The government plans to increase the upper limit for trading that charities can carry out without incurring a tax liability from £5,000 to £8,000 where turnover is under £20,000, and from £50,000 to £80,000 where turnover exceeds £200,000. 

Help for village halls

The budget also included a number of measures which will benefit particular charity sectors. The government announced it would make available up to £8 million to help with the cost of repairs and alterations to village halls, miners’ welfare facilities and armed forces organisations’ facilities. The government also announced £10m funding for supporting veterans with mental health needs and extra funding for Air Ambulances. The government will also provide  £1.7m for educational projects in schools to mark the upcoming 75th anniversary of the liberation of the Bergen-Belsen concentration camps.