UK: Charities Bill - Round-up of Recent Developments

Originally published April 2004

There is still no date for publication of the eagerly awaited Charities Bill.

The following is a round up of recent developments of interest to the charity/not-for-profit sector.

From 6 April 2004 a tax payer can nominate a charity to receive repayments due under his tax return. Only one charity can be chosen to receive the donation and the choice must be made from the Inland Revenue list published on its website. Charities should therefore consider putting themselves forward for inclusion on the list.

The repayments are made under the gift aid scheme with payments being increased in the charity’s hands by an amount equal to the basic rate of tax. A higher rate tax payer is entitled to receive the difference between the basic rate and the higher rate by entering the donation on his self assessment tax return.

The 10% tax relief top up from the government has now been discontinued but small and medium size firms can receive cash to help set up payroll giving schemes.

The move to scrap this has been postponed to enable consultation to continue until mid-June.

Leaflets on giving to charity by businesses (IR64) and by individuals (IR65) have been updated, as has IR178 on giving land, buildings, shares and securities to charity.

Churches and sacred places can reclaim the full VAT amount for building repairs until March 2006.

Consultation has been announced to enable VAT to be applied more fairly to land and property used by charities.

The corporation tax threshold for registered CASCs is doubled from 1 April 2004. CASCs have some of the benefits of charitable status but with a less stringent application process. They pay no tax on bank or building society interest and no corporation tax on chargeable gains reinvested in the club. Trading income or income from property below certain thresholds are also exempt from corporation tax. As a result of the budget CASCs will be exempt from corporation tax on profits derived from trading, if their trading income is less than £30,000 and on profits derived from property, if their gross property income is less than £20,000.

The Institute of Fundraising has rejected the BUSE Report on self regulation as being too complicated. The Charities Aid Foundation is setting up a steering group to take forward the BUSE Commission proposals. CAF is thought to be more objective than the Institute of Fundraising. It is looking to compile a unified voluntary sector response to these recommendations with a view to presenting findings to the Home Office in June.

With effect from 1 April 2004 Trustees’ names appear on the Charity Commission website. Trustees who are concerned that this will put them at personal risk can apply for exemption. Trustee information is already available in paper format.

The Charity Commission has launched a new web-based incorporation pack for charities wishing to become companies. This is a complex area that requires detailed attention to all aspects of a charity’s operations and the Charity Commission’s new more streamlined application process is welcome.

The government set 1 April 2004 as the target date for all areas to be covered by the Compact between the government and the voluntary sector.

The Compact, although not legally binding, enshrines five fundamental rights as follows:

• The right to be consulted on new policies that affect charities
• The right for the impact on the sector to be assessed when developing new policies
• The right to fair access to funding, including adequate notice of new funding opportunities or changes in funding
• The right to campaign and comment on government policy even if organisations receive funding from government
• The right to be properly funded for the work the charity does for the government.

There is a Compact mediation scheme to resolve disputes and there is a new funding code under consultation. The Treasury has recommended that grants and contracts should pay for the full cost of work.

The Charity Commission is encouraging Local Authority grant givers to check whether charities have submitted accounts to the Commission. This is an additional reason to ensure that your accounts are filed by the due date as failure to file on time could jeopardise your funding.

On 1 October 2004 the final phase of the Act is implemented and all service providers (i.e. those providing goods and facilities to the public or a section of the public) must ensure that they have made appropriate physical adjustments to premises, subject to a "reasonableness" test. The Act does not define what is "reasonable" but the size and the resources of the service provider will be taken into account. Where adjustments are made to leasehold premises the landlord’s consent will be required and, where the premises are listed buildings, listed buildings consent will also be required.

In December 2003 legislation came into effect to protect workers from discrimination and harassment at work on grounds of sexual orientation and on grounds of religion or belief.

On 1 February 2004 the maximum amount of a week’s pay for unfair dismissal/redundancy calculations was increased from £260 to £270. The maximum compensatory award for unfair dismissals was increased from £53,500 to £55,000 on the same date.

On 4 April 2004 the standard rate of statutory maternity pay, statutory adoption pay and statutory paternity pay increased from £100 per week to £102.80 per week.

In October 2004 the national minimum wage increases for adults (aged 22 and over) to £4.85 per hour, the development rate (18 to 21 year olds) increases to £4.10 per hour and a new rate for 16 and 17 year olds is introduced at £3 per hour.

The Promotion of Volunteering Bill, a private member’s bill to address the concern that volunteers are put off by the fear of litigation, has received its second reading. The Bill, which aims to protect volunteers, allows them to ask for a signed "statement of inherent risk" from service and activity users. Although this does not absolve the volunteer from liability the statement will be considered in the event of negligence claims and other litigation. What remains to be seen is whether the Bill’s aims can be achieved without excessive bureaucracy being imposed on all concerned.

A Commission is being established to devise a national youth volunteering strategy and government funds will be made available to encourage and extend mentoring of and national community service by young people.

The government has announced its intention to seize dormant bank deposits and to use them to tackle social exclusion and the Balance Charitable Foundation was launched in March to help persuade financial institutions to release unclaimed assets. The Foundation intends to consult with voluntary sector umbrella bodies and financial institutions in May.

© RadcliffesLeBrasseur

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