The Chancellor's Budget: Implications for Church Finances

John Green

Source: Catholics in Fundraising,

The budget announced on 30th October 2024 brings significant changes that could affect UK churches and church charities, as outlined by John Green of Catholics in Fundraising. Here's a breakdown of the key points:

Tax increases and impact

£40bn in Tax Increases: While the government has allocated £1.3bn for local government funding, it remains uncertain how this will directly benefit churches and church charities.

Higher Employee Costs: Starting April 2025, employers' national insurance contributions will rise by 1.2 percentage points to 15%. This increase could burden church employers, especially given the prevalence of part-time and lower-wage roles within many congregations. For example, parish administrators who work only a few days a week may be particularly affected.

Wage Pressures: With the minimum wage also rising and employment allowance reductions potentially exempting some churches, there could be potential wage increases for employees. This may also put pressure on corporate donations to Church charities.

Changes in Education Funding

Private School Tax Breaks: The planned removal of tax breaks for private school fees and business rates relief could strain independent church schools' ability to offer bursaries to students from lower-income backgrounds.

Investment in State Schools: The government has committed £1.4bn to rebuild 500 state schools, including church schools, and is increasing annual maintenance funding by £300m. Additionally, the budget for free school breakfast clubs will triple to £30m in 2025-2026, alongside a £2.3bn rise in the core school budget.

Economic Outlook

Sluggish Growth Predicted: The Office for Budget Responsibility forecasts modest GDP growth of 1.1% in 2024 and 2.0% in 2025. This sluggish growth may limit individual giving to churches and charities.

Frozen Tax Allowances: With tax allowances frozen, more individuals, including pensioners, could find themselves newly liable for tax, impacting disposable income available for donations.

Regulatory Changes and Charity Compliance

Charity Commission Budget Increase: The budget includes plans to strengthen existing charity tax rules by April 2026, aimed at preventing abuse and ensuring tax relief is properly allocated to charities.

Gift Aid Considerations: For churches that rely on Gift Aid, monitoring these regulatory changes will be crucial.

Concerns on Listed Building VAT

Missing Support for Listed Buildings: One notable omission from the budget is any mention of the VAT refund for listed buildings, set to expire in March 2025, which could have significant implications for churches maintaining historic structures.

Conclusion

John Green of Catholics in Fundraising, emphasizes the need for churches, church charities, and Catholic schools to collaborate in navigating this challenging landscape. Seeking new funding opportunities and remaining compliant with evolving regulations will be vital for supporting communities and those on the margins.

For churches and church charities, adapting to these changes while ensuring continued support for their missions will require proactive measures and strategic planning.

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About Catholics in Fundraising

Catholics in Fundraising is the UK's leading network for Catholics working in fundraising. It aims to build a strong community of like-minded individuals, offer insights into best practices, and encourage innovative approaches to fundraising within the Catholic context.

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email catholicsinfundraising@gmail.com