Plummer Parsons Charity Newsletter 5 Sep 2010
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newsletter… CHARITY News and Views from Plummer Parsons Sept 2010 New Guidance from the Charity Commission In view of present financial and challenging difficulties together with developments within the sector, the Charity Commission has published four updated sets of financial guidance for charities and their advisers: Internal Financial Controls (CC8). Financial Difficulties and Insolvency (CC12). Charities and Reserves (CC19). Charities and Risk Management (CC26). According to Andrew Hind, Chief Executive of the Charity Commission, ‘regardless of a charity’s size, this revised guidance is something for all trustees to read’. Details of all four sets of guidance can be found on Plummer Parsons’ website www.plummer-parsons.co.uk/charity CIOs – 2011? Charitable Incorporated Organisations (CIOs) are the new corporate structures designed specifically for charities, offering limited liability and charitable status, reporting only to the Charity Commission. Hopefully, the necessary legislation will be dealt with by the new Parliament and CIOs will be available by early 2011. A) Personal allowances will increase by £1,000 from April 2011 and nearly 900,000 people will cease to be taxpayers. Some of these taxpayers could be making donations to you under Gift Aid and this tax advantage will then cease. Are you aware of this? Have you planned for this? B) The higher rate of income tax will increase from 40% to 50% and your higher rate taxpayer donors will obtain an increase in their personal tax refunds accordingly. Have you advised your donors of this? Have you suggested that they Gift Aid the additional tax repayment back to you? C) For some taxpayers capital gains tax will increase from 18% to 28%. Now there is an even greater advantage for your donors to donate to your charity shares, land and property rather than sell the same and suffer capital gains tax before making a donation to you. D) From 4 January 2011 VAT will increase from 17.5% to 20% and the Charity Tax Group calculates this will mean an additional £143 million costs to charities. There will be serious benefits in accelerating capital expenditure and incurring costs in December 2010 rather than in January 2011. E) For Listed Places of Worship there is a scheme in place entitling such bodies to claim grants equal to the VAT on building repairs but this will cease at 31 March 2011. This deadline is not expected to be extended so any major repairs should be sooner rather than later ie before March 2011. F) Inheritance tax continues at 40%. Any legacy to a charity will automatically save inheritance tax at 40%. Are your supporters aware of this? Remember – 3% transitional relief on Gift Aid donations is withdrawn after 5 April 2011. Budget 2010 What do the tax increases mean for charities? www.plummer-parsons.co.uk/charity
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Transcript of Plummer Parsons Charity Newsletter 5 Sep 2010
newsletter…
CHARITYNews and Views from Plummer ParsonsSept 2010
New Guidance from the Charity CommissionIn view of present financial and challenging difficulties together with developments within the sector, theCharity Commission has published four updated sets of financial guidance for charities and their advisers:
� Internal Financial Controls (CC8). � Financial Difficulties and Insolvency (CC12).
� Charities and Reserves (CC19). � Charities and Risk Management (CC26).
According to Andrew Hind, Chief Executive of the Charity Commission, ‘regardless of a charity’s size, thisrevised guidance is something for all trustees to read’. Details of all four sets of guidance can be found onPlummer Parsons’ website www.plummer-parsons.co.uk/charity
CIOs – 2011? Charitable IncorporatedOrganisations (CIOs) are the new corporate structures designedspecifically for charities, offering limited liability and charitable status,reporting only to the Charity Commission. Hopefully, the necessarylegislation will be dealt with by the new Parliament and CIOs willbe available by early 2011.
A) Personal allowances will increase by £1,000from April 2011 and nearly 900,000 people willcease to be taxpayers. Some of these taxpayerscould be making donations to you under Gift Aidand this tax advantage will then cease. Are youaware of this? Have you planned for this?
B) The higher rate of income tax will increase from40% to 50% and your higher rate taxpayerdonors will obtain an increase in their personaltax refunds accordingly. Have you advised yourdonors of this? Have you suggested that they GiftAid the additional tax repayment back to you?
C) For some taxpayers capital gains tax willincrease from 18% to 28%. Now there is aneven greater advantage for your donors todonate to your charity shares, land and propertyrather than sell the same and suffer capitalgains tax before making a donation to you.
D) From 4 January 2011 VAT will increase from17.5% to 20% and the Charity Tax Groupcalculates this will mean an additional £143million costs to charities. There will be seriousbenefits in accelerating capital expenditure andincurring costs in December 2010 rather than inJanuary 2011.
E) For Listed Places of Worship there is ascheme in place entitling such bodies to claimgrants equal to the VAT on building repairs butthis will cease at 31 March 2011. This deadlineis not expected to be extended so any majorrepairs should be sooner rather than later iebefore March 2011.
F) Inheritance tax continues at 40%. Any legacyto a charity will automatically save inheritancetax at 40%. Are your supporters aware of this?
Remember – 3% transitional relief on Gift Aiddonations is withdrawn after 5 April 2011.
Budget 2010 What do the tax increasesmean for charities?
www.plummer-parsons.co.uk/charity
The new ‘Civil Society’With the new Coalition Government in place Conservative MP Nick Hurd,former Shadow Charities Minister, has been appointed the first Minister forCivil Society. Nick mentioned that the term ‘the third sector’ is now bannedfrom use across Government because ‘the boss really doesn’t like it’.Encouragingly Nick advised that the first principle of the new CoalitionGovernment ‘is to do no harm’.
“Fit and Proper Managers”Under the Finance Act 2010 there is a new definition for tax purposes ofcharities and other organisations entitled to UK charity tax reliefs. Charitiesand CASCs must satisfy the ‘management condition’ whereby its managersmust be fit and proper persons to be managers of the organisation. Wheresuch a person is not deemed to be fit and proper the charity/CASC maylose their charitable status. The new test requires charities/CASCs to sendinformation to HMRC about every trustee and senior staff appointment.
Be careful – check the guidance – contact us for more information.
Public Benefit – Knowing moreAccording to the Charity Commission their research has shown that76% of trustees know something about Public Benefit, 41% knowinga great deal or a fair amount. What is worrying, however, is that 24%of trustees know nothing about Public Benefit and they are failing intheir duty to be kept abreast of this all important matter.
Check our website to find out more about the assessments that theCharity Commission have already carried out and the generalprinciples by which charities must now abide.
Eastbourne18 Hyde Gardens,Eastbourne, BN21 4PTT 01323 431200F 01323 [email protected]
Hailsham5 North Street,Hailsham, BN27 1DQT 01323 846622F 01323 [email protected]
Brighton4 Frederick Terrace, Frederick Place,Brighton, BN1 1AXT 01273 725123F 01273 [email protected]
News and Views from Plummer ParsonsSept 2010 CHARITY
Cheques – on the way out?Many charities were taken by surprise when the Payments Councilannounced in December 2009 that it was intending to close the centralcheque clearing which if it happened would sound the death knellfor cheques.
As you will appreciate many charities depend on cheques as a form ofpayment and receive many donations by cheque as well. Consultationsare underway and a final decision will be made in 2016.
In advance, however, consider now what alternatives you have forpayments and bankings to ensure that you do not lose out.
Please address all enquiries, responses and otherissues raised by this newsletter to:
Email us the details of others whowould like to receive this newsletter.
In view of the shame of our politicians in claiming and declaringtheir expenses, charity trustees will want to ensure that anypayments they receive are fully declared for all to see.
Unless specifically provided for in the charity Trust Deed or othergoverning document, no trustee can be remunerated for servicesrendered. However, trustees can be reimbursed for expensesincurred during the performance of their duties and it is mostimportant that such expenses are claimed wherever possible.
Trustees can of course donate such expenses back to the charityunder Gift Aid – we will gladly advise you further about theproper way to do this.
Charity accounts must also properly disclose such expensesand in particular:
� the total amount of trustees’ expenses in the financial year
� the number of trustees who claimed or incurred expensesduring the financial year (names do not have to be provided)
� if applicable, a statement to the effect that no expenseswere claimed
� a brief description of the nature of the expenses reimbursedeg accommodation and subsistence, travel costs etc
Expenses –the dreaded word!
Trustees’ Week 25-31 October 2010The Charity Commission are planning a week in October to increaseawareness and understanding of the benefits of trusteeship andencouraging more individuals to take an interest in such responsibilities.
Do you know the type of trustees you need or have difficulty findingsuitable volunteers? Please let us know and we will gladly guide youthrough the various processes involved.
