The charity sector has been in vocal opposition to a proposed uplift in employer National Insurance Contributions (NICs) from which charities are not exempt, with the National Council for Voluntary Organisations (NCVO) warning that it could impose a financial burden of an estimated £1.4 billion on charities annually.
As announced in the Labour Government's budget in October, NICs will increase to 15% from 1 April 2025, with the NIC threshold being lowered from £9,100 to £5000. The uplift comes amidst other pressures facing the charities sector, including a 6.7% rise in the national living wage effective from 1 April 2025.
As of the end of November, over 7000 charities have signed an open letter signed by the Chief Executives of NCVO and the Association of Chief Executives of Voluntary Organisations, urging the government to extend reimbursements on the increased costs of NICs that charities face as a result of the uplift.
As a result of increasing costs, charities may feel compelled to reduce headcount, cut salaries, or scale back their services. In their open letter, NCVO warned that nearly three-quarters of charities are in the process of withdrawing from their public service delivery or considering doing so, and that most charities are reducing their services to save costs.
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