Employer NICs rise: Chancellor rules out exemption or reimbursement for charities
Melanie May | 28 November 2024 | News
Chancellor Rachel Reeves has ruled out exempting or reimbursing charities impacted by the upcoming increases to National Insurance Contributions (NICs), which were announced in the recent Budget.
Employer NICs are set to rise in April from 13.7% to 15% – a change that will cost the sector an estimated £1.4bn.
The impact was set out in a letter to the Chancellor, sent earlier this month from NCVO and ACEVO, and co-signed by more than 7,300 charities and voluntary organisations. In the letter, NCVO and ACEVO outlined the potential impact of the rise for a sector already under pressure from rising demand, escalating costs, and falling funding. The letter urged the Chancellor to commit to reimbursing voluntary organisations’ increased employer NICs, as for the public sector.
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In her response, Reeves says the government remains “committed to ensuring that the sector is recognised and valued for the crucial support it provides to so many people and look forward to continuing to work together.”
Reeves also says that raising the rate of employer NICS was “one of the toughest decisions” made in the Budget and that the government had taken “a number of difficult but necessary decisions on tax, welfare, and spending to fix the public finances, fund public services, and restore economic stability.”
She acknowledges the sector’s important role and the need to protect the smallest businesses and charities, adding:
“…which is why we have more than doubled the Employment Allowance to £10,500, meaning more than half of businesses (including charities) with NICs liabilities either gain or see no change next year. Businesses and charities will still be able to claim employer NICs reliefs including those for under 21s and under 25 apprentices, where eligible.
“The government also provides support to charities through a range of reliefs and exemptions, including reliefs for charitable giving. The tax reliefs available to charities are a vital element in supporting charitable causes across the UK, with more than £6 billion in charitable reliefs provided to charities, CASCs and their donors in 2023 to 2024.”
Ruling out support on NICs, she says:
“The government has committed to provide support for departments and other public sector employers for additional employer NICs costs only. This is the usual approach the government takes to supporting the public sector with additional employer NICs costs, as was the case with the previous government’s Health and Social Care Levy.”
Sector response
Responding to the letter, Saskia Konynenburg, Executive Director, NCVO, Jane Ide, CEO, ACEVO, and Clare Mills, Deputy Chief Executive, CFG said that it wasn’t the news they wanted and that the organisations are committed to ensuring the government understands the impact on the sector:
“The reply from the Chancellor acknowledges the vital contribution of civil society while reiterating the scale of the challenge ahead for the new government, and why this decision has been made and cannot be changed. Although this isn’t the news we want, we’re committed to raising the voice of the sector on this issue so that government understands the very real impact it is having, and where possible will seek to minimise the impact of these changes.
“While we do that, it’s important that we commit to developing a stronger partnership between government and the sector in the future. In her letter, the Chancellor recognised our role as a trusted and independent partner. To strengthen that relationship, it’s vital the sector shares its views on the Covenant Framework, as this will help us agree the basis of our collective future relationship and ensure the sector included in discussions around significant changes that will affect both charities and the people and causes we exist to serve.”
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.