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Back of the Sofa’s Alternative Guide to the Tax Year End

  • If you’re juggling the finances of a charity - bravo! - it can be a thankless and often un-rewarded task. You won’t need reminding (it’s been on the same day since 1800) that the end of the Tax Year is fast approaching, ahead of which there are a few ‘left-field’ areas it’s well worth looking into. If you have a spare hour between now and 5th April, here’s a checklist you might find handy and - who knows - could even earn you an unexpected accolade… as well as extra funds.  

    VAT on Energy Bills

    Charities can apply to reduce the VAT on their energy bills from 20% to 5% and - if you’ve paid 20% in the past – can ask for a rebate for the past four years. This is the maximum period of time that HMRC will allow and it counts in Tax Years so, by submitting a form to your supplier now, means your rebate could include VAT payments as far back as the tax year 2013-2014. A successful reduction in VAT also removes the Climate Change Levy element from your bills too. If your energy bill has 20% VAT in the calculations and want to know what to do next, head over to Back of the Sofa


    Business Rates Discretionary Relief

    As you know, most charities are also entitled to some form of relief on their Business Rates. And, like VAT discounts, if you don’t ask... you don’t get. Some pay 20% while others pay nothing at all because they have been granted Discretionary Relief. These could be churches, charities or clubs that benefit the local community - even organisations to do with social welfare, science, literature or the fine arts. Each of the UK’s 420 or so Councils has their own rules and guidelines but, like HMRC, they work in Financial Years and so relief will often be back-dated to the start of April in the Tax Year that you are applying.

    To see how your Council does it, use this search tool.

    Tax on Savings Interest

    In 2016, banks started paying interest gross on savings accounts but prior to that they would often deduct tax at source and that would automatically remove 20% from any interest earned. This was common among charities that hold ‘business accounts’ – even though charities are exempt from paying tax on bank interest. Again, the period of time allowed to reverse any incorrect deductions is four Tax Years. That means charities now only have a rapidly diminishing window of opportunity to claim back the tax their bank incorrectly removed in the 2013-2014 period as well as up to 2016. If your bank statements show that tax was paid, you need to tell HMRC via Charities Online or ask for a ChR1 form.

    If you are successful in these or other – alternative – ways, please let me know!

    Nick Heath is founder of Back of the Sofa, a free resource to help charities find cash they didn’t know about. (Twitter and Facebook)


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