Chancellor Rachel Reeves in Brussels (Image: Getty)
Rachel Reeves’s recent decision to hike Employer National Insurance Contributions (NICs) 13.8 per cent to 15% is nothing short of a disaster for many charities. It will put vital services and ultimately lives at risk.
These changes will strip an estimated £1.4 billion a year of largely charitable income from charities and hand it to the Treasury to pay for things like GB Energy that won’t produce any energy. For many charities like Refuge or Women’s Aid, this will have the effect of wiping out most of what they receive in Gift Aid.
All this comes at a time when charities are facing dwindling fundraising revenue and rising demand because of other disastrous decisions by the Chancellor – like cancelling the for most pensioners.
Charities like Age UK are facing extra tax at the same time they are being increasingly relied upon to provide support vulnerable pensioners made worse off by this Government.
It is charities that provide vital public services that the public sector fails to provide. Like hospices. The NHS couldn’t function without hospices providing end of life care.
Take Marie Curie which says the bill from the NIC increase alone will be nearly £3 million. Or Mencap, preparing for a £5.3 million bill every year.
Smaller charities like Teenage Cancer Trust will face equally crippling bills for them – £300,000. The NHS is exempt from the tax bill because the Government knows how damaging it is.
Charities are also key partners in delivering local council services.
The Government says Councils will be compensated for the lost revenue from NI increases but the charities delivering services on their behalf won’t be. Local charities in my East Wight constituency, like Aspire which is currently trying to build accommodation for vulnerable women, face additional costs of £27,000 every year —equivalent to a full-time staff member.
Sir Keir Starmer has been in power since July 2024 (Image: Getty)
The Labour Government talks of a “fundamental reset” in its relationship with civil society. The relationship with civil society is being undermined by taxing charities on which the Government relies for that relationship.
People do not donate to charities in order for the Treasury to feather its own nest. It’s time for Government to reverse this disastrous decision and give charities their money back.