PRESS RELEASE

Release date: 8th May 2014

Don't be too relieved by Budget tax legislation, warns Cranfield

While recent legislation announced at the 2014 Budget will help charities receive the tax relief they are entitled to, Midlands based Insolvency Practitioner Cranfield Business Recovery is reminding charities that the changes are only the start of a long road to recovery for the third sector.

As of 6 April, provision wasmade for tax relief on qualifying investments in eligible social enterprises. The tax relief to the investor will be given against income tax liabilities for the year of the investment and capital gains tax on chargeable gains made on qualifying disposals of such investments at a rate of 30%.

In addition, it was announced that The Community Amateur Sports Club (CASC) scheme will enable individuals and companies to make donations as Gift Aid to a CASC and will allow companies to claim tax relief on a qualifying donation. Further announcements made during the Budget include extra grants for Air Ambulance charities, and widening the criteria for Gift Aid donations over the next two years.

While this signals good news for the third sector, Cranfield is warning that they are only the first steps on a long road to recovery for the third sector. Charities could still face financial difficulties if they do not haverobust financial management and control systems in place, including staff that are trained at the right level, Cranfield is warning.

Brett Barton, Director of Cranfield Business Recovery, said: "While the Budget announcement will help the third sector to recover, it is vital that trustees and directors of non-profits remember that they are still operating a business. Often these people are volunteers with little or no experience of running a business. This makes it difficult for some charities to maintain sufficient cash flow, to be aware of their legal constitution and to operate a charity that generates a surplus. Focusing on these areas is vital for a charity to operate successfully."

It might seem as though the third sector is already starting to improve with the number of Britons donating to charity in 2013 having increased for the first time in three years. However, Cranfield is urging charities to consider the impact the recession had on the sector and put processes in place to ensure that the charity is not as vulnerable to economic change. UK Giving 2012, Britain's biggest annual survey of charitable giving, revealed donations had fallen by 20 per cent in real terms during 2011 and 2012. This meant that charities' income was reduced by £1.7 billion in cash terms.

"If organisations plan and organise their structures early on, steps can be taken to remedy a potentially serious situation through changing management practices, implementing stricter financial controls, or seeking alternative funding streams and revenues. This is the key to helping charities as they now come through the recession and adapt to a brighter, more positive time."

"Making sure that staff and volunteers are well trained in all areas of running a business and are aware of the operational restrictions placed upon the charity by its constitution is essential. Charity's staff need to understand their roles and responsibilities and know what is expected of them. And remember, there is no substitute for sound financial advice, no matter what sector an organisation operates in. If you feel your third sector organisation is struggling to make a surplus then seek help immediately; don't wait for things to get worse. "

"By putting these processes in place, charities will be free to thrive as third sector activity picks up, without leaving themselves vulnerable to economic change."

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Editor's note:

Brett Barton is available for interview and to assist with any feature requests where necessary.

About Cranfield Business Recovery

Cranfield Business Recovery is the number one insolvency practice in Coventry, employing a total of 15 staff. Set up in November 2001 to offer a professional service to individuals with corporate, business, and personal financial problems, they work closely with professional advisors to assist their clients. Cranfield offer a bespoke and sympathetic service in circumstances that are often difficult and stressful.

For more information contact

Nicola Pittaway, Bridge PR & Media Services Tel: 024 76 520025, Email:denise@bridgepr.co.uk

Or

Brett Barton, Cranfield Business Recovery, Tel: 024 7655 3700, Email:brett.barton@cranfieldbusinessrecovery.co.uk