The following general tax changes are likely to affect many charities and may require some amendment to expenditure budgets.
Employers’ contribution rates increased from 11.8% to 12.8% in April 2003. This may cause a significant increase in the core costs of a charity.
Companies are now likely to be eligible for a £10,000 0% rate band when calculating their corporation tax. This may be of advantage to charities’ trading subsidiaries. They will be able to retain an element of their profits by reducing their Gift Aid payment. The subsidiary will then be able to eliminate any deficit on reserves and retain some funds for future growth purposes.
The National Minimum Wage (NMW) regulations have recently been amended. Employers must be able to demonstrate that they are paying the NMW and detailed records must be kept. Generally all full-time and part-time employees are covered by the rules.
For workers aged 22 and over the NMW will increase to £4.50 from October 2003, from its current £4.20. For 18-21 year olds the minimum will rise to £3.80, from its current £3.60.