Spending Review 2015 and Autumn Statement: Local government and tax announcements

Aside from the headline announcements regarding sports funding – see James Allen’s excellent summary blog here – the Spending Review and Autumn Statement included a number of other announcements relevant to sport.

The most obvious – and potentially most important – of these is the planned changes to local government spending. This is important since local government is a major contributor to sport and recreational activity through investment in facilities and delivery of local leisure activities.

The Spending Review plans in relation to local government funding (excluding the central departmental spending in DCLG) make interesting and rather depressing reading.

LT Tax

The steep reduction in the central grant to local government (a 56.3% real terms cut by 2020) reflects the Government’s intention to phase out this grant and to devolve control over locally-raised income (Council Tax and business rates) to local authorities. The idea behind this is to empower local authorities to set business rates to attract business to generate economic growth and thereby generate revenue to fund local services.

While this sounds attractive in theory, the biggest difficulties are likely to be faced in more deprived areas where there is already a limited Council Tax base and where business rate concessions are already made to keep businesses in the local area. In these communities there is likely to be very little scope to raise additional revenue locally and therefore discretionary spend on sport and recreation is almost certain to come under heavy pressure, particularly if other costs – notably for social care – continue to rise. Some areas have already closed local facilities in response to funding pressures and it is difficult to see how this change to local government funding arrangements will alleviate them. If anything, it may result in wider disparities between local areas in terms of sport and leisure provision.

In addition to the local government funding arrangements, a number of other important tax-related announcements have been made including:

• Government will consult at Budget 2016 on proposals to expand support that can be given to grassroots sport through the corporation tax system. This is an issue we raised in our response to the DCMS Sports Strategy and, subject to the detail, is an extremely encouraging development.

• Following previous consultation, legislation will be brought forward to ensure that, from April 2017, income from sporting testimonials and benefit matches will be liable to income tax. This will be subject to an exemption up to £50,000 where the testimonial is not customary or contractual.

• Overseas competitors taking part in the 2016 London Anniversary Games and the 2017 IAAF and IPC World Athletics Championships in London will be exempt from income tax on earnings from the event. This continues the Government’s use of tax exemptions for selected major sporting events and it will be interesting to see if it is extended to other sporting events in future.

• Government will review the Gift Aid Small Donations Scheme to ensure that it is operating as effectively as possible. A call for evidence will be published in December 2015.

• Government will support a bid to host the Rugby League World Cup in 2021 as part of the ‘Northern Powerhouse’ initiative.

Overall, a lot to digest and there is no doubt that the changes announced today, particularly to local government funding, could have significant consequences for the sport and recreation sector over the next few years.

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