On 30th October 2024, Rachel Reeves, the Chancellor of the Exchequer, used her first budget to announce a significant increase in public spending, financed by a combination of tax rises and higher borrowing.
There was one area of the budget that was of particular concern to charities and the voluntary sector, being the increase in employer National Insurance contributions (NIC). The rate of employers’ NICs will rise by 1.2% from 13.8% to 15% whilst the NIC threshold will decrease from £9,100 to £5,000.
With ever increasing costs, reduced funding, and higher demand all charities will feel the effect of such an increase in employers’ NIC, smaller charities, in particular, may need to reconfigure already limited resources away from the essential services they provide, putting the communities they support at risk.
These changes will come into effect on 6th April 2025, until then the forecast for charities and the voluntary sector is unclear.
NICVA is in the process of liaising with the Minister of Finance and the Minister for Communities to highlight sector concerns and is advocating for support to help voluntary organisations meet these additional costs.