Autumn Statement 2023: How will it affect the Not-For-Profit sector?
Autumn Statement 2023: How will it affect the Not-For-Profit sector?
This year’s autumn statement saw the Chancellor announce a headline-grabbing 110 new measures aimed at promoting growth in the UK’s economy. Included within this raft of new measures are many reforms and announcements that impact the Not-for-Profit sector. We have set out below the measures which will have the most impact.
This issue had been highlighted by charities and the change provides welcome VAT relief to the sector. We would recommend that charities consider the above reforms when budgeting for any relevant conversion works. If you would like to discuss the mechanics of the relief in further detail, one of our Not-for-Profit VAT specialists would be happy to discuss this with you.
The legislation will also expand HMRC’s powers to immediately remove ‘Gross Payment Status’ in cases of serious non-compliance in relation to VAT, Income Tax, Corporation Tax and PAYE.
In a further reform, the majority of payments made by landlords to tenants are to be removed from the scope of CIS.
It is vital for those organisations who have both contractors and subcontractors in their structure (e.g. Housing Associations with Devcos) that rely on ‘Gross Payment Status’ to ensure they are compliant with all VAT obligations. Removal of this status could have significant cashflow implications.
A ‘connected persons’ rule will also be introduced for cultural reliefs, restricting relief on payments made between ‘connected persons’ to a maximum of the amount of relevant expenditure incurred by the ‘connected person’. Connected party transactions will then need to be separately disclosed on the new form.
If your organisation incurs connected party transactions in relation to cultural relief claims, you should consider the impact of this reform on future claims. If you would like to discuss the impact of this reform in further detail, one of our sector experts would be happy to discuss this with you.
A further £3bn will be provided through the Affordable Homes Guarantee Scheme to help housing associations access cheaper loans for quality and energy efficiency works as well as for new homes.
These measures are expected to enable social housing organisations to continue to provide affordable housing throughout the UK.
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VAT relief for energy-saving materials
Legislation will be introduced to expand the VAT relief available on the installation of energy-saving materials by extending the relief to additional technologies, such as water-source heat pumps, and bringing buildings used solely for a relevant charitable purpose within scope. The reforms are expected to be implemented in February 2024 but more details will be published soon.This issue had been highlighted by charities and the change provides welcome VAT relief to the sector. We would recommend that charities consider the above reforms when budgeting for any relevant conversion works. If you would like to discuss the mechanics of the relief in further detail, one of our Not-for-Profit VAT specialists would be happy to discuss this with you.
Construction Industry Scheme
Many Housing Associations are required to operate The Construction Industry Scheme (CIS). The CIS ‘Gross Payment Status’ test for subcontractors will be extended from 6 April 2024 to include compliance with VAT obligations.The legislation will also expand HMRC’s powers to immediately remove ‘Gross Payment Status’ in cases of serious non-compliance in relation to VAT, Income Tax, Corporation Tax and PAYE.
In a further reform, the majority of payments made by landlords to tenants are to be removed from the scope of CIS.
It is vital for those organisations who have both contractors and subcontractors in their structure (e.g. Housing Associations with Devcos) that rely on ‘Gross Payment Status’ to ensure they are compliant with all VAT obligations. Removal of this status could have significant cashflow implications.
Cultural Reliefs
From 1 April 2024, claims for Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR), Museums and Galleries Exhibition Tax Relief (MGETR) and other cultural reliefs must be accompanied by an online Information Form. In anticipation of the new form being published, we recommend that organisations consider the level of data they hold in respect of the claims being made.A ‘connected persons’ rule will also be introduced for cultural reliefs, restricting relief on payments made between ‘connected persons’ to a maximum of the amount of relevant expenditure incurred by the ‘connected person’. Connected party transactions will then need to be separately disclosed on the new form.
If your organisation incurs connected party transactions in relation to cultural relief claims, you should consider the impact of this reform on future claims. If you would like to discuss the impact of this reform in further detail, one of our sector experts would be happy to discuss this with you.
Housing Associations
The government has announced that the Local Housing Allowance will be raised in April 2024 to the 30th percentile of local market rents.A further £3bn will be provided through the Affordable Homes Guarantee Scheme to help housing associations access cheaper loans for quality and energy efficiency works as well as for new homes.
These measures are expected to enable social housing organisations to continue to provide affordable housing throughout the UK.
Annual Tax on Enveloped Dwellings (ATED)
The ATED annual charges will rise by 6.7% from 1 April 2024 in line with the September 2023 Consumer Price Index. Any organisations within the scope of the ATED regime should consider the additional charges when budgeting for future periods.VISIT OUR AUTUMN STATEMENT HUB