134/01
30th November 2001
DOUBLE BOOST FOR SPORT IN THE COMMUNITY
In the latest Pre-Budget Report, the Chancellor announced a double boost for community sport. He launched a consultation document seeking views on the best way to support community amateur sports clubs (CASCs) which make a positive contribution to their local communities. This coincides with the Charity Commission’s decision that CASCs may now apply for charitable status. In addition, a deal with the football pools companies has been made to provide additional funding to grass-roots sport.
Welcoming the Pre-Budget announcements on community sport, Financial Secretary to the Treasury, Paul Boateng said today:
“These announcements will be a valuable boost to the sporting activities of many local communities, helping to sustain sport in the community for its myriad benefits including health, community building and crime reduction. The Charity Commission’s proposal to extend charitable status to sports clubs is most welcome. It will recognise and strengthen the valuable work sports clubs up and down the country are doing. The Government is listening to the concerns of sports clubs and demonstrating its commitment to supporting the hugely important contribution they make to society.
“In addition, following the success of our radical reforms to betting taxation, we will now go further by modernising the tax treatment of pools betting. The big football pools companies have a long history of supporting good causes and I am very pleased that – as a result of these reforms – they have decided to extend their funding of the Football Foundation and the Foundation for Sports and the Arts for a further two years.”
COMMUNITY AMATEUR SPORTS CLUBS
Today’s consultation document – “Promoting Sport in the Community” - outlines the current tax status of sports clubs and the case for supporting CASCs. In the past, many CASCs have argued that they deserve charitable status in recognition of the important role they play in the community and that in the absence of charitable status, they should at least enjoy similar tax relief. Following the Charity Commission’s decision to grant CACSs charitable status, they will now be able to enjoy the full range of benefits that this status confers – not only tax relief, but also mandatory business rate relief, greater funding opportunities and public recognition. The Government is keen to hear views from interested parties on the way forward and in particular whether there is still a strong case for proceeding with a separate Inland Revenue scheme (details of which are attached), or whether the Charity Commission package would appear to provide better prospects.
The Minister for Sport Richard Caborn said:
“These measures demonstrate the importance this Government attaches to sport and, in particular, the vital role that volunteers in the community play in sustaining sport at the neighbourhood level.
“I welcome Littlewoods and Vernons agreement to continue funding for the Foundation for Sport and the Arts and Football Foundation for a further two years.”
FUNDING AGREEMENT WITH FOOTBALL POOLS COMPANIES
As the Government announced in the Pre-Budget Report, the current 17.5 per cent pools betting duty will be abolished in the next Budget and replaced by a 15 per cent tax on pools companies’ gross profits.
As a result, the leading football pools companies have agreed to extend their current funding of the Football Foundation and the Foundation for Sports and the Arts for a further two years until March 2004. This will help these Foundations to continue their vital work in supporting grass-roots sports clubs and community arts projects.
Colin McGill, Managing Director of Littlewoods Leisure, said:
“The very welcome tax reform announced by the Government is great news for sports clubs and other good causes across Britain who will benefit from Littlewoods’ continued support. Over the last ten years, our Pools business has given back over £400m to football, other sports and the arts. We are therefore delighted to be able to commit to further funding of these good causes over the next two years.”
Steve Roberts, Managing Director of Vernons, added:
“Vernons are proud of their long association with the good causes, which have helped benefit many local sporting activities throughout the country. The betting taxation reforms announced today are warmly welcomed and will help Vernons to continue their funding of the Foundations to help encourage sport in local communities.”
DETAILS AND NOTES FOR EDITORS
COMMUNITY AMATEUR SPORTS CLUBS
What a CASC can achieve will always be subject to the funds it can raise. The separate Inland Revenue tax relief package proposed seeks to increase incentives to support CASCS (through gifts of money, land and buildings) by extending some of the tax reliefs available to charities.
Like charities, sports clubs will benefit from formal recognition of the role they play in promoting community participation in health recreation and gain greater funding opportunities, in addition to the full range of charitable tax relief which includes:
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Tax exemption for interest from bank or building society deposits;
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Inheritance tax exemptions for gifts of cash or assets;
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Treating gifts of assets to a CASC as made on a no gain/no loss basis for capital gains purposes;
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Incentives to encourage individual donations, such as Gift Aid (enabling CASCs to increase the value of any donation by 28 per cent) and Payroll Giving (tax free donations made through the pay roll, and eligible for a 10 per cent Government supplement until April 2003);
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80 per cent mandatory business rate relief and 20 per cent discretionary relief in England and Wales.
To be eligible for the proposed tax relief package, CASCs would have to demonstrate: open and non-discriminatory membership; be organised on an amateur basis, and as their main purpose, promote an eligible sport.
The Charity Commission definition would use broadly similar criteria, recognising as charitable purposes “the promotion of community participation in healthy recreation by the provision of facilities for the playing of particular sports; and the advancement of the physical education of young people not undergoing formal education”.
Comments on the consultation document are invited by 1st February 2002. Copies of the CASC consultation document will be on the Treasury website (see below) or can be obtained from:
Community Amateur Sports Clubs Consultation
Tax Policy Team
HM Treasury
Parliament Street
London
SW1P 3AG
The consultation document is available below in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website
For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.
Media links
FUNDING AGREEMENT WITH FOOTBALL POOLS COMPANY
DETAILS
In 1999, the Government announced a three-year agreement with the Pools Promoters Association, whereby the duty on pools betting was cut in return for the main pools companies agreeing to donate a percentage of their annual turnover to the Football Foundation and the Foundation for Sport and the Arts. This funding has so far made a substantial contribution to the work of the two Foundations in supporting grass-roots sport and community art projects.
This funding agreement is due to expire at the end of March 2002, and the Government has therefore been consulting with the main pools companies, Littlewoods and Vernons, to explore the scope for a new agreement. As a result of this consultation, the Government announced in the Pre Budget Report that:
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the current Pools Betting Duty of 17.5 per cent will be abolished in Budget 2002 and replaced with a 15 per cent tax on pools companies? gross profits (defined as the difference between the stakes laid with pools companies and the prizes they pay out); and
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Littlewoods and Vernons have agreed to extend their funding of the Foundations for a further two years, at a rate equivalent to 4 per cent of their gross profits.
As well as providing valuable additional income for sport and the arts in local communities, these changes will give pools betting the same modernised tax structure introduced for other forms of betting, and should help to attract new technology-based pools companies to set up their operations from a UK base. They will also cut the tax liability for charities and sports clubs who run fantasy leagues and similar pools-based competitions.
NOTES TO EDITORS
Littlewoods and Vernons together account for 95 per cent of pools industry turnover. Of the remaining 50 or so pools promoters, most are small operations run for the benefit of local charities or sporting associations. The ?fantasy league? format is also classed as pool betting.
The large football pools companies have a history of contributing to good causes. That commitment was deepened in 1991 when they agreed to donate 2.5 per cent of their turnover to the Football Foundation (FF) (formerly the Football Trust). In 1995 the industry broadened donations to include the Foundation for Sport and the Arts (FSA). Over the last decade, hundreds of millions have been contributed to the Foundations.
In March 1999, Barbara Roche, as Financial Secretary, and the Pools Promoters Association (PPA), signed a 3-year agreement in which the industry undertook to increase contributions to the FF and the FSA to 6% of their turnover (split equally between the foundations). The new agreement will secure funding for a further 2 years until March 2004.
Money from the foundations is targeted in the form of grants to kick-start numerous grass roots projects. Grants can be awarded to individuals or groups and can vary in size from a few hundred pounds (for example, to buy equipment for a sports club) to several thousand pounds (for example, to improve local leisure facilities). More information about the sort of projects supported by the FSA can be found in their Annual Report for 2000.
Since April 2000, donations to the Football Foundation (an England-only body) have been distributed across the UK as follows: 8.9% for sportscotland for grants towards football academies; 5% to the FA of Wales for grassroots and ground improvement work; 13.3% to the Northern Ireland Sports Council for the Safe Sports Ground Scheme; and 72.8% for the Football Foundation in England for grassroots and ground improvements - less £250,000 funding for Supporters Direct, established to assist supporters trusts.
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