National governing bodies (NGBs) will be able to donate directly to grassroots sport schemes without paying corporation tax following an intervention by the Treasury.
Previously, NGBs had to set up a charity to donate money to grassroots sport without paying tax, but they will now be able to contribute without the creating an alternative body.
The government is also trying to encourage private sector companies to contribute to initiatives of this type by cutting corporation tax on donations up to £2,500. If they wish to donate more tax free they will have to do so through the appropriate NGB.
Changes to corporation tax deductions will come into effect from April 2017.
A Treasury spokesperson told
Sports Management that the government wanted to simplify the process and cut the bureaucracy to help cultivate the grassroots sport landscape, particularly in light of the
Sporting Future strategy that was published last year.
Sporting Futures was the first piece of sports policy published in over a decade, and promotes grassroots sport and physical activity as drivers of social, health and economic improvement.
The initiative was first floated during last year’s Autumn Statement, and was the subject of a consultation earlier this year.
Chancellor Philip Hammond rubberstamped the proposal while revealing his first Autumn Statement since taking over his role from George Osborne.
The encouragement given to private sector companies to contribute to the growth of grassroots sport is particularly noteworthy as the government attempts to wean organisations off public money.
“In times of pressure on the government finances, it is crucial that government, the private sector and the sports industry work together to consider new ways of ensuring the long-term financial sustainability of the sector,” said David Gauke, financial secretary to the Treasury, at the time of the publication of the consultation paper in March.
The consultation paper added: “By reaffirming its support to private initiatives, the government wishes to encourage sports clubs to fully exploit the potential of alternative income streams. The outcome of this consultation should contribute to the creation of new sources of funding for sports activities and foster a more joined-up approach to delivery and funding.”
