What do the fiscal changes mean for charities?

The new chancellor announced a large number of changes in his first ‘fiscal event’. Some of these will impact charities

THe first change to come in will be the reverse of the increase in National Insurance rate from 6th November. Payroll providers and most software will be updated in time for November pay runs, but make sure you check this before finalising your return for November.

The Energy Bill Relief Scheme, will include the voluntary sector and will help. This support will be equivalent to the Energy Price Guarantee put in place for households. The Charity Tax Group has some helpful information about this.

The lower rate of income tax may affect Gift Aid but there is a four year transitional relief for charities so you have time to plan.

The big unknown impact for charities is what the government announcements mean for the rate of inflation and interest rates. For some charities the change in the exchange rate may also have an impact, for example if aid is sent overseas a fall in the pound means that the value of aid drops.

Charities should look at the impact of higher interest rates on any borrowing and look to take advantage of any increased returns on savings.

The increase in inflation may erode the value of some revenue streams and at the same time affect the cost of many inputs – from staff wages to software. This needs to be looked at when budgeting and planning ahead.

In summary – if you have questions about this please contact your accountant who may be able to provide support with both the administrative side and the impact on your strategy.

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