Budget reflections for the Charity sector

In October’s budget the government set out an increase in Employer’s National Insurance contributions from 13.8% to 15% from April next year. Charities are not exempt from this requirement, unlike the public sector and NHS, and it is undoubtedly going to have a significant impact on charity finances.

In addition to the increased rate of contribution, the government also announced that contributions would start to be paid from income of £5,000, down from the current £9,100. As this impacts most employees, this is expected to have an even greater impact on employment costs for charities, despite a minor concession of an increase employment allowance to £10,500 (from £5,000).

The implication of the National Insurance Contribution rise is undoubtably eyewatering, at a time when charities are trying to direct every penny towards delivering the best service towards their charitable objectives.

The news is particularly worrying for those in the sector that do not have mechanisms to mitigate against these increases and cannot pass those costs on. In particular, organisations that rely on funding from public sources will be expecting to see increases to this funding, otherwise there will be even more pressure on self-generated income sources to enable them to continue providing the same level of service.

Sadly, there was no great relief or support specifically for charities announced in the budget, and there will be increased calls in the coming months for more help to be given.