In 2009-10, the government is going to provide a new one-off £20 million Hardship Fund. This fund will make grants to charities that:

This funding is in addition to, and builds on, the £42.5 million action plan, Real Help for Communities: Volunteers, Charities and Social Enterprises, that the Office of the Third Sector (OTS) announced in February 2009.

(See paragraph 5.82, Chapter 5, Economic and Fiscal Strategy Report and paragraph A.95, Chapter A, Financial Statement and Budget Report.)

Many in the voluntary sector were hoping that the Budget would include an announcement about an "opt-out" system for Gift Aid, under which, instead of donors having to give permission for the tax they pay on donations to go to charity, it would go to charity automatically unless a donor objected. There was, however, no specific mention of an opt-out system - only a statement that the government continues to explore ideas to improve Gift Aid, and has commissioned research into the effect of redirecting higher-rate relief from donors to charities (see paragraph 5.83, Chapter 5, Economic and Fiscal Strategy Report).

It is not clear what effect the new additional rates of tax will have on Gift Aid.

The remittance basis rules will be amended in the Finance Bill 2009 to ensure that tax relief under Gift Aid is available where the donor pays tax on the remittance basis, and is required to pay the £30,000 remittance basis charge (see Legal update, 2009 Budget: key private client announcements: Gift Aid). This change will take effect from April 2008.

The government is going to consult on the design and functions of a Social Investment Wholesale Bank (SIWB), after which the OTS will report back with substantive proposals. A SIWB would be a wholesaler of social investment finance, working with existing investors and lenders at the retail level to increase the supply of investment in the third sector. Funds from dormant accounts, collected through the operation of the Dormant Bank and Building Society Accounts Act 2008, may be available to support a SIWB.

(See paragraph 5.84, Chapter 5, Economic and Fiscal Strategy Report.)

The Chancellor announced an increase in the threshold above which people become substantial donors (see Legal update, 2009 Budget: key private client announcements: Substantial donors to charity: threshold raised).

Contrary to the expectations (and hopes) of many in the charitable sector, there was no announcement about the repeal of the substantial donors rules. Instead, the government plans to consult further and make proposals in the 2009 Pre-Budget Report (see Legal update, 2009 Budget: key private client announcements: Substantial donor legislation under further consideration).

The government is going to consult, with the Charity Commission, on ways to enhance the regulation of Common Investment Funds (CIFs) and Common Deposit Funds (CDFs) by bringing them more fully under the regulation of the Financial Services Authority. CIFs and CDFs are collective investment schemes specifically for charities, established by the Charity Commission under section 24 of the Charities Act 1993, and currently regulated by the Charity Commission. CIFs and CDFs are themselves charities, and enjoy tax advantages; any new investment format considered under these proposals would retain these advantages.

The Charity Commission has issued a press release welcoming the proposals and adding some background information.

(See paragraph 5.86, Chapter 5, Economic and Fiscal Strategy Report.)