Autumn Statement: Tax support for charities; more relief for social investment

The Autumn Statement has confirmed military, emergency services, and hospice charities are among organisations to receive further tax support, including benefiting from fines levelled against banks for interest rate rigging.

Social investment is also set to receive a boost, as the government seeks to extend tax relief for the initiatives and consult on a new relief for indirect investment in social enterprises.

Documents outlining Autumn Statement policies and costings confirm a further £50m in Libor fines has been committed over the next six years to support military charities and other good causes.

Delivering the statement, Chancellor George Osborne said Libor fines will support armed services benevolent charities, the Ghurkhas, and £10m is allocated to veterans with hearing problems.

Osborne also said hospice charities will be able to reclaim the VAT they incur.

“Our hospice charities also make an enormous contribution to our communities,” Osborne said. “They have long been subject to unfair rules that force them to pay VAT, when the NHS does not. I am today refunding the VAT that these hospice charities incur.”

From April 2015, UK search and rescue and air ambulance charities will be eligible to claim refunds on VAT they have paid on purchases of goods and services for their non-business activities. VAT will be refunded for search ambulance charities, and the cathedral renovation fund is to be extended.

“Thanks to the brilliant campaigns run by my Honourable Friends for Filton, Bristol North West, and others, we will use Libor money for new helicopters for the Great Western Air Ambulance, and the Kent, Surrey and Sussex Air Ambulance too,” the Chancellor said. “And I will go further and refund VAT for our search and rescue, and air ambulance organisations across the whole UK.”

The statement confirmed the government will seek EU approval to lift the annual investment limit for Social Investment Tax Relief (SITR) to £5m per annum from April 2015, up to a total of £15m per organisation. Government will also seek to extend relief to small-scale community farms and horticultural activities.

The statement said the government will make special purpose vehicles for subcontracted and spot-purchase social impact bonds eligible for SITR through secondary legislation next autumn. Plans to launch a consultation early next year into introducing a Social Venture Capital Trust were also announced.

Elsewhere, the government has announced it will allow gains that are eligible for Entrepreneurs’ Relief (ER) and deferred into investment under SITR or the Enterprise Investment Scheme to benefit from ER when the gain is realised.

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