Changes to NI employer contributions estimated to cost charities £1.4 billion

NCVO and ACEVO are calling on the Treasury to take urgent action to avoid further financial burden on the sector.

In this week’s Budget, the Chancellor announced plans to increase employers’ National Insurance Contributions (NICs). The National Council for Voluntary Organizations (NCVO) estimates the tax rise measure will cost the charity sector, which employs almost a million people, an extra £1.4 billion a year.

Charities of all sizes will feel the impact of increases in employer NICs and, due to an already challenging working environment, will have less flexibility than ever to meet these rising costs.

Many charities will be forced to make difficult choices in the coming months as a result of planned increases, including staff cuts, pay cuts and, most worryingly, cuts or suspensions of services, which could put the people and communities they support at greater risk. .

Sector member bodies, the National Council for Voluntary Organizations (NCVO) and the Association of Chief Executives of Voluntary Organizations (ACEVO) have written an open letter to the Chancellor outlining the potential consequences and risks that not addressing this issue could involve.

Sarah Elliott, CEO of NCVO, said:

“Since the Budget was published on Wednesday, we have received countless messages from concerned charity leaders. This is the biggest shock to the sector since the pandemic. Changes of this magnitude to employer National Insurance contributions would have huge implications. Our data shows these changes will put additional pressure on the £1.4bn sector. Charities across the country are already in dire straits, facing the triple threat of rising demand, rising costs and funding cuts. These additional costs, which the budget does not have enough money to cover, will be devastating. Addressing these issues will ensure that charities can continue to provide vital services to the people and communities who depend on them.”

Jane Eade OBE, CEO of ACEVO, said:

“We are hearing from our members that the effect of increases in employers’ national insurance contributions, coupled with the ongoing financial pressures experienced by many civil society organizations, is a major concern for sector leaders who have limited choice in how to ensure their activities adapt to absorb hit. We believe the recent words from the Prime Minister and Secretary of State, highlighting their belief in the value of a strong civil society, will mean the door is open for meaningful debate on these issues.”

Charities and voluntary organizations are invited to sign the letter, which is available on the NCVO website: https://www.ncvo.org.uk/news-and-insights/news-index/open-letter-chancellor-national. -insurance/.