Summary: The Chancellor did not make too many announcements that affect the third sector in his March budget, however what he did announce will broadly be received as good news.
Although this year’s budget contained very few charity-specific issues, announcements were on the whole positive – it could doubtless have been much worse!
In brief, the Chancellor has extended the VAT refund scheme for museums and galleries and introduced corporation tax relief from April 2017 for museums and galleries, as well as allocating funding to charities from fines levied on banks and revenues raised from the sale of feminine hygiene products. Read on for more detail on the changes.
Museums, Galleries and VAT
The VAT refund scheme for museums and galleries will be extended with effect from 16 March 2016. The scheme in question currently allows national and university museums and galleries to claim back VAT incurred on most goods and services purchased in order to grant free rights of admission to their collections. Ordinarily, it is not possible to recover the VAT incurred on goods and services purchased to support non-business activities. Therefore, VAT incurrent in connection with the free admission of the public is not normally recoverable.
The scheme will be extended so that it will apply to a larger range of museums and galleries. To be eligible, a museum or gallery must:
- Be open to the public for at least 30 hours per week, without exception;
- Offer free entry without prior appointment;
- Hold collections in a purpose-built building; and
- Display details of free entry and opening hours on the museum website.
Museums and galleries will also be required to complete a strategic business case as part of the application process. The completion of an application does not guarantee admission to the scheme and the decision to include a museum or gallery is ultimately made by ministers.
While the scheme represents a significant extension of the current scheme, it does not appear that it will cover libraries. Having said that, the British Library, the National Library of Scotland and the National Library of Wales are included in the current scheme (on the basis that they qualify as museum collections). Unless other libraries qualify as museum collections in the same way, it is unlikely that the scheme will be extended to them. In addition, it does not seem that VAT incurred in relation to reading rooms will be covered by the scheme.
Museums, Galleries and Corporation Tax
There will be a new corporation tax relief, to come into effect in April 2017, for museums and galleries for the costs associated with temporary and touring exhibitions. The relief aims to encourage museums and galleries to develop creative new exhibitions and display their collections across the country. There will be a consultation on its design over summer 2016. The Government has published the Culture White Paper which confirms it commitment to the above tax reliefs.
Charities Benefit from Bank Fines
The Treasury has released a list of 30 charities that will receive grants totalling £45m from fines imposed on banks announced in the Budget. The money will be awarded over the next four years and comes directly from Libor fines levied on banks who were found to have illegally fixed the inter-bank lending rate or Libor in 2012.
The grants have largely been awarded to charities with objects focusing on military and ex-military causes, hospices and healthcare, including the National Mesothelioma Centre.
Tampon Tax Fund for women’s charities
The Government is committing £12 million of funding from taxes on feminine hygiene products to support a range of good causes benefitting women and girls, including grants to Breast Cancer Care and Girlguiding.
As ever, we will keep you up to date with further developments as they come to light.