Here we summarise the main elements of Gordon Brown’s first full budget, as they affect community affairs, and spotlight the need for change in tax relief to encourage in-kind giving.
EMPLOYABILITY
extension of the New Deal from the under 25s to lone parents and long term unemployed, initially through pilot schemes, and additional funds for over 50s and disabled people;
nationwide network of mentors to support youngsters in the introductory ‘gateway’ period
£15 million pilot New Deal for Communities, targeting the most disadvantaged housing estates, extending beyond training to aspects of social exclusion, quality of life and housing management;
new Working Families Tax Credit, paid by employers through the pay-packet, following a review undertaken by Martin Taylor, chief executive of Barclays;
cuts in the starting point of national insurance but with an increase in the rate of employers’ NI from 10% to 12.2%, effectively reducing the cost of employing lower paid staff paid for by increases on higher paid staff;
a new childcare tax credit for lower paid working families, worth 70% of costs; because of tapered relief, some families earning up to ?30,000 can benefit.
EDUCATION
extra £10 million to expand the number of proposed education action zones from five to 25; EAZs will allow consortia with private companies to run primary and secondary schools in defined areas, with over 60 bids submitted in March;
£20 million for a University Challenge Scheme to match funds raised from companies to help commercial exploitation of scientific discoveries.
CHARITIES
tax relief on donations to education and anti-poverty work in sixty ‘low income’ countries under Millennium Gift Aid, to run until the end of 2000, with the lower minimum limit cut from ?250 to ?100 and payable by instalments;
tax relief for companies making in-kind donations of plant, machinery and stock to schools and colleges also to low income countries;
UK limits on Give As You Earn and Gift Aid unchanged.
ARTS
access and education package for museums and galleries, worth ?9 million in exchequer and lottery funds;
‘new audiences’ programme, with reduced price tickets for school leavers and money for regional arts.
ENTERPRISE
Contributions Agency transferred from Department of Social Security to Inland Revenue, with a one-stop-shop service for new businesses;
enhanced first year capital allowances for one year only and lower tax on long term capital gains;
reduction in smaller companies rate of corporation tax to 20% and retention of pre-payment exemption on abolition of advanced corporation tax;
further encouragement to venture capital investments, with increase in tax relief upper limit.
ENVIRONMENT
increase in landfill tax standard rate from £7 to £10 per tonne, with consultation on how the Environmental Bodies Credit Scheme, allowing a 90% tax credit, can be enhanced to encourage more recycling;
reduction in VAT to 5% on installing energy saving materials;
lower Vehicle Excise Duty for small cars;
a green taskforce led by Sir Colin Marshall, chairman of British Airways, on new economic instruments such as an industrial energy tax.
Comment
At the core of the budget’s micro-economic measures, affecting the supply side of the economy, was the ’employability’ package – designed to encourage and in some cases cajole disadvantaged people into work, from young and long term unemployed people to lone parents and people with disabilities. Attention now switches to bringing these schemes to reality and securing company participation.
What are the chances of a long term impact on social exclusion? Mainly funded by the one-off windfall tax on utilities and raids on lottery money, in truth that depends largely on macro-economic issues, with the strength of sterling and a possible recession threatening to cut the number of real jobs available. Time will tell.
For the moment, let’s look elsewhere, at the Chancellor’s on-going review of taxation of charitable giving. Welcome though the new tax relief on `Millennium’ in-kind giving undoubtedly is, it exacerbates the current muddle. Instead of the clear rules about cash giving, companies have to rely for relief against profits on a series of limited concessions covering secondment, stock, facilities and plant and machinery. On VAT the lack of any exemptions is a serious deterrent as companies are reluctant to go on relying on Customs & Excise turning a blind eye. What is needed now is a consortium of leading charities, backed up by companies, to make the case for a comprehensive package of tax relief for in-kind giving..
Corporate Citizenship Briefing, issue no: 39 – April, 1998
COMMENT:
Here we summarise the main elements of Gordon Brown’s first full budget, as they affect community affairs, and spotlight the need for change in tax relief to encourage in-kind giving.
At the core of the budget’s micro-economic measures, affecting the supply side of the economy, was the ’employability’ package – designed to encourage and in some cases cajole disadvantaged people into work, from young and long term unemployed people to lone parents and people with disabilities. Attention now switches to bringing these schemes to reality and securing company participation.
What are the chances of a long term impact on social exclusion? Mainly funded by the one-off windfall tax on utilities and raids on lottery money, in truth that depends largely on macro-economic issues, with the strength of sterling and a possible recession threatening to cut the number of real jobs available. Time will tell.
For the moment, let’s look elsewhere, at the Chancellor’s on-going review of taxation of charitable giving. Welcome though the new tax relief on `Millennium’ in-kind giving undoubtedly is, it exacerbates the current muddle. Instead of the clear rules about cash giving, companies have to rely for relief against profits on a series of limited concessions covering secondment, stock, facilities and plant and machinery. On VAT the lack of any exemptions is a serious deterrent as companies are reluctant to go on relying on Customs & Excise turning a blind eye. What is needed now is a consortium of leading charities, backed up by companies, to make the case for a comprehensive package of tax relief for in-kind giving..
Corporate Citizenship Briefing, issue no: 39 – April, 1998
COMMENTS