Charities Face £1.4bn Tax Hit as Chancellor Declines National Insurance Concessions

Civil Society reports this week that Chancellor Rachel Reeves has rejected calls to shield charities from an estimated £1.4bn annual increase in employer National Insurance Contributions (NICs). 

The rise, introduced in last month’s Autumn budget, will raise employer NICs from 13.8% to 15% starting in April 2025. At the same time, the threshold at which employers begin paying NICs for each employee will drop from £9,100 to £5,000, increasing the financial burden for many organisations.

While the employment allowance will more than double to £10,500 to protect the smallest employers, many charities say this won’t be enough to offset the additional financial strain.

In October, an open letter from over 7,300 charities and voluntary organisations, coordinated by NCVO, ACEVO, and the Charity Finance Group, urged the government to reconsider the tax hike, warning of its potential impact. 

However, Reeves responded this week without offering further concessions or exemptions for the sector. Read the letter here.

Charities now face tough decisions about how to absorb these increased costs, raising concerns about the long-term sustainability of their services.

Read the full Civil Society article here

We’re gathering feedback from Powys Third Sector and want to hear from you. If you’re concerned about how the NI rise might impact your organisation, please share your thoughts with us here.