We've taken a look at the detail of George Osborne's Autumn Statement and government's Spending Review to provide members with insight from a co-operative perspective.
new options to attract investment for co-ops
new business costs for co-operative employers
- more community energy woes
ISAs and crowdfunding: new opportunities for co-ops
After consultation government has decided to allow debt securities offered on crowdfunding platforms by co-operative and community benefit societies to be held in a new Innovative Finance ISA. The growth of crowdfunding presents a major opportunity for many co-ops to diversify sources of capital and raise finance from a broader public. These opportunities are significantly enhanced by opening up ISA eligibility in this way.
In our response to the government consultation we described to HM Treasury the complexities involved in co-op equity being held in ISAs, and so are pleased that measures have not been rushed through in this regard.
This follows on from moves in July to allow co-operative and community benefit society debt securities listed on exchanges to be held in ISAs.
We are interested to hear the views of our members on this development. Please email our Policy Officer James Wright.
To fund its ambitions for a national apprenticeships agenda government will impose a 'levy' of 0.5 per cent of the pay bill of every employer with a pay bill over £3 million. This will come into force from April 2017 and will be collected through the PAYE system. This represents a new cost of business for medium sized and larger co-ops.
We already know apprenticeships will be a major part of this government's business strategy through to 2020. We hope our members can feature in this, not least because in doing so more young workers will become familiar with co-ops. While it may be practicable for larger employers to develop working arrangements with higher education institutions, we have heard business and education representatives say this is not the case for individual SMEs. Are there more opportunities for co-operation between co-ops on apprenticeships? Do co-op models offer a means for our members to organise their efforts in this area more efficiently and effectively?
More community energy woes
Contained within the policy detail of the Autumn Statement was a reiteration of the recent U-turn on community energy tax relief. However, no further rationale has been provided for the change of policy and we still have not received a satisfactory answer as to why Social Investment Tax Relief (SITR) in particular has been withdrawn. Co-operatives UK is currently working with partners to gather Parliamentary support for our proposal to allow community energy back into SITR, while providing extra protection against tax avoidance.
But we also note HM Treasury has included an additional policy statement not previously released:
"The government will exclude all remaining energy generation activities from the schemes from 6 April 2016, as well as from the enlarged SITR."
At present exclusion from EIS and SITR is linked to receipt of subsidy (Feed-in Tariff for example). Faced with the prospect of low or no electricity subsidies, some in this sector have identified a silver lining that EIS and SITR could be back on the table. But this is not going to be the case. HM Treasury officials have confirmed to us that this means that all energy generation activity, electricity and heat, with or without subsidy, will be excluded from these tax relief from April 2016. A further blow.
One piece of good news for community heat schemes is the announcement that the Renewable Heat Incentive will be increased to £1.15 billion by 2020-21.
Streamlined, digitised HMRC: Good and bad?
HMRC is tasked with providing all businesses with an all encompassing online tax account by 2020, with transactional functionality. This should make it easier and hopefully cheaper for co-ops to manage their tax affairs. We know that this can cause a real headache for our smaller members, especially in the community sector, so this is very welcome.
However this digitisation comes as part of a broader streamlining of HMRC, which has agreed an significant 18 per cent budget cut in the Spending Review. Alongside new online functionality HMRC plans to operate with a smaller higher skilled workforce. Where things run smoothly a reliance on online systems and less human intervention is fine, but we know that things do not always work that way for our members. Co-operatives - and societies in particular - sometimes run into problems when dealing with HMRC because their distinctive features do not fit neatly into tax frameworks and there is a lack of proper understanding among officials. These issues will need to be ironed out before HMRC completes its transformation or we fear current problems will become ever harder to deal with.
Reducing Corporation Tax
George Osborne announced Corporation Tax will reduce to 18 per cent by 2020.
Extending Small Business Rates Relief
The Chancellor had good news for our smaller members as they will benefit from an extension to 2017 of the Small Business Rates Relief.