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Signs of recovery - an end to the tough times?

The next six months could potentially herald an official end to the UK recession and a new Government - with all the initial optimism that new governments often bring to the markets. So, is the immediate future for charities bright?

Most commentators will say that the jury is out on that one. But there are three ‘already known’ reasons for charities to be less cheerful.

From April 2011:

• Gift Aid transitional relief is scheduled to be abolished. Broadly speaking, under present rules, this will reduce the tax value of charities’ gift aid claims by around 11%;
• Employers’ National Insurance contributions are to be increased to 13.3%. Broadly, this will increase the cost of this part of the payroll bill by 3.9%. At the same time, employees’ contributions go up to 11.5% with the additional rate for high earners going up from 1.0% to 1.5% - creating further pressure on payroll costs.

Potentially from any point:

The rate of VAT could increase beyond the 17.5% that came into force from 1 January 2010. With rates in the UK being relatively modest compared to the Eurozone as a whole and with VAT being one of the most effective ways for the Government to raise additional revenue, this must be a real possibility.

With pressure on Government finances all round, charities cannot expect any favours in the short term.  Each of these measures will mean adjusting budgets to meet increased costs. For larger charities, the amounts could be significant.

• Do you think that your charity will be badly hit?
• Do you have plans to deal with these changes?
• Or are you simply not concerned?

Share your views here!  

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